(The following statement was released by the rating agency)
Oct 05 - Fitch Ratings has assigned O'KEY LLC's prospective issuance of a new bond under its of RUB8bn programme an expected foreign and local currency senior unsecured rating of 'B+(exp)', and a Long-term National Rating of 'A-(rus)(exp)'. O'KEY Group S.A.'s (O'KEY)Long-term foreign and local currency Issuer Default Ratings (IDRs) have been affirmed at 'B+' and the National Long-term rating at 'A-(rus)'. The Outlooks on all ratings are Stable.
The notes are an unsecured instrument issued by O'KEY LLC and guaranteed by Dorinda JSC. These notes therefore rank junior compared to O'KEY's secured debt instruments.
Fitch assumes that given the group's size, market position in the Russian food retail market, the prospect of recoveries for noteholders, given default, would likely be based on a "going concern" basis.
In Fitch's bespoke recovery analysis for the company, a distressed multiple of 6.0x and an embedded value (EV) of RUB30.5bn are assumed. Fitch's distressed EV analysis implies a post?restructuring EBITDA of RUB5.6bn
Based on Fitch's estimated enterprise valuation in a distressed sale scenario the resulting recoveries on the proposed notes equates to a Recovery Rating of 'RR1' (91% - 100% recovery given default) although the assigned recovery is capped at 'RR4' (31%-50% recovery prospects given default) given the Russian jurisdiction based on the agency's country-specific treatment of Recovery Ratings. Therefore, there is no notching of the notes from O'KEY's IDR.
Fitch expects O'KEY to access the capital market in order to finance its aggressive expansion programme in the coming years.
The final ratings on the planned notes are contingent upon the receipt of final documents conforming to information already received by Fitch
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