S&P: Rosinter, Russia's Largest Casual-Dining Restaurant Chain, Assigned 'B-' Rating; Outlook Stable
August 27, 2010 Standard & Poor's
MOSCOW (Standard & Poor's) Aug. 27, 2010--Standard & Poor's Ratings Services said today that it had assigned its 'B-' long-term corporate credit rating to Russia's largest casual-dining restaurant chain Rosinter Restaurants Holding (OJSC). The outlook is stable.
"The 'B-' long-term corporate credit rating is based on our assessment of Rosinter's business risk profile as "weak" and its financial risk profile as "highly leveraged"," said Standard & Poor's credit analyst Anton Geyze.
Rosinter's credit quality is constrained by "less-than-adequate" liquidity, structurally weak free cash flow generation, and significant adjusted debt leverage. From the perspective of its quality of earnings, Rosinter is exposed to consumer confidence and discretionary spending in Russia, which is its dominant market of operation.
The rating on Rosinter is supported by the chain's position as the largest player in the Russian casual-dining market, with a track record of profitable growth. Rosinter benefits from strong brand recognition and a broad restaurant network. Additionally, Rosinter's liquidity risks are somewhat mitigated by proceeds from a recent issuance of equity, which the chain plans to use to fund new restaurant locations.
The stable outlook reflects our view that Rosinter's refinancing risks are somewhat mitigated by available cash from an equity issuance and the history of Rosinter's key banks rolling over short-term debt, as long its operating performance remains sound.
"Ratings upside might develop if there are meaningful improvements in Rosinter's debt maturity structure and overall liquidity management," said Mr. Geyze. "Ratings upside would only materialize in the context of stable operating dynamics and consistent financial policy."
Ratings downside might develop if deteriorating cash flow generation makes Rosinter more reliant on external liquidity provision than is the case currently.
Company — Rosinter Restaurants Holding
Full namePJSC Rosinter Restaurants Holding