Press Releases / 15.08.2016

Press Release as of 15.08.2016


TEIC CJSC

AK&M Rating Agency has affirmed the national scale credit rating of TEIC CJSC at 'A', tier 2, with a stable outlook and withdrew it due to the Customer's refusal to have the rating updated.

The 'A' rating indicates that TEIC CJSC qualifies as a highly creditworthy borrower. The risk of a failure to meet obligations in time is low, the full or partial debt restructuring risk is minimal. The rating assignment is based on the Credit Rating Methodology for Specialized Project Financing Entities rev. February 26, 2016.

Tuva Energy Industrial Corporation CJSC is a project company established to implement an integrated investment project to build the Elegest-Kyzyl-Kuragino rail line and a coal port terminal at Vanino Port (Khabarovsk Krai) linked to the development of the Elegestskoye coal deposit in the Tyva Republic (TEIC holds the coal mining license). The Project passport was approved by the Government of Russia's order no. 1059-r as of June 16, 2014. The cost of the project is estimated at approximately RUB 217 billion. Along with shareholders' equity, the project was expected to be financed out of Russia's National Welfare Fund and with loans from leading Russian banks secured by the government's guarantees. However, external financing is still an open question, given the challenging macroeconomic situation and the magnitude of the project.

The Company's credit rating remains supported by the persisting investment appeal of the project, its conformity to the social and economic development priorities of the Russian Federation and the Tyva Republic. The high technical and economic power of the Project is proven by the positive opinions of Glavgosexpertiza Rossii (Russia's Main State Expert Appraisal Department), Russia's Ministry of Economic Development and Ministry of Finance. The Elegestskoye deposit, including the to-be-constructed coal preparation capacities, is included in the Russian Coal Industry Development Program to 2030.

The key rating constraint for the corporation is the lack of certainty as to the terms, amount and sources of financing of the project. Besides, AK&M Rating Agency notes the substantial dependence of the key economic performance indicators of the project (and consequently, the creditworthiness of TEIC CJSC) on the global environment in the market of coking coals which currently remains in a recession, despite sporadic price rebounds caused by local surges in consumer demand.

TEIC CJSC was registered in November 2012 (initially as a limited liability company) in Kyzyl city, the Tyva Republic. The Company's authorized (share) capital is RUB 1,000,010,000. TEIC has been beneficially owned by Ruslan Baisarov, a Russian businessman, since June 11, 2014. To restructure its business and separate the powers, the Company established subsidiary companies: TEIC-Mining, TEIC-Trading House, TEIC-Transport, TEIC-Highways, acquired DVVP.

This press release is based on the Credit Rating Methodology for Specialized Project Financing Entities.

AK&M Rating Agency assigned a credit rating to TEIC CJSC for the first time on June 24, 2014. The last credit rating was taken on July 27, 2015. All rating action announcements are available on the www.akmrating.ru website.

For estimation purposes, we completely rely on the reliability of information provided by the Company. The rationale for AK&M Rating Agency's judgment on the rating may include information acquired from other sources we deem to be reliable; however, the agency does not check the input data exhaustively and disclaims all responsibility for their possible errors.

The rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's creditworthiness and shall not be construed as a recommendation to purchase or sell securities, or to lend funds.

AK&M Rating Agency shall not be held liable for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

CJSC AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993.

 

AK&M Rating Agency

Ul. Gubkina 3, Moscow, Russia

www.akmrating.ru

Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.

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