IBI-Rating has affirmed the credit rating of «MX CONSULTING» LLC bond issue at uaBBB– grade

IBI-Rating informs on affirming of the long-term credit rating of A series registered interest (unsecured) bonds of «MX CONSULTING» LLC at uaBBB- grade, the rating outlook is «evolving».

According to the Issuer, «MX CONSULTING» LLC will soon become a part of the non-bank financial group «Salamandra», the beneficial owner of which will be Mr Yuriy Yavtushenko. Besides MX CONSULTING» LLC the Group will include insurance companies PrJSC «IC «SALAMANDRA», IC «Van Klik», assistance company «Finance Line», Medical Center «Salamandra», and factoring company «Marx.Capital».

The decision to issue these securities with a nominal value of UAH 60,000 thousand was made in November 2019. The funds raised will be used to purchase highly liquid residential real estate, overhaul and redevelop existing of non-residential real estate, carry out works and provide a wide range of services to improve the quality of operational management of the non-residential real estate. The bonds were issued among a predetermined number of persons without a public offering. The bonds will be redeemed in January-February 2030.

The Issuer has been contracted of voluntary third-party liability insurance, the subject of the which is property interests related to the obligation to indemnify the damage to the third parties and/or property of the third parties. Insurance risk is the occurrence of liability in accordance with applicable law for damage to property of third parties as a result of failure to fulfil obligations to pay coupon income or to repay bonds.

The property of «MX CONSULTING» LLC contains investment property with a residual carrying amount of UAH 47,317.9 thousand. Investment property is diversified by type of property and city location. As of June 30, 2020, the company’s debt obligations amounted to UAH 75,753 thousand, of which: UAH 60,000 thousand - debt on placed bonds; UAH 4,000 thousand (equivalent to USD 150,000) - bank loan arrears; UAH 11,573 thousand - interest-free repayable financial assistance from several related parties. Thus, the Issuer's debt significantly exceeds operating income, which indicates a high debt burden.

Net income of «MX CONSULTING» LLC, which is formed by renting investment real estate, following the results by 6 months of 2020 it increased to UAH 2,735 thousand, against UAH 493 thousand for the same period of the previous year. The increase in debt during the analyzed period led to a significant increase in financial expenses, which increased to UAH 3,523 thousand, against UAH 72 thousand for the same period of the previous year. As a result, the activity of «MX CONSULTING» LLC in the first half of 2020 was unprofitable - the net loss amounted to UAH 1,860 thousand against UAH 17 thousand of net profit for 6 months of 2019.

In order to carry out the analytical research the materials provided by of «MX CONSULTING» LLC have been used, including: financial statements for 2017-2019 and the first half of 2020, reference information about the activities of the enterprise, parameters of the issue of bonds, other necessary internal information, expectations of the IBI-Rating Agency, as well as the information from the public sources, which the Rating Agency considers credible.

Finance department
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