X5 Retail Regulatory News (FIVE)

8 Aug 2006 08:34

Pyaterochka Holding N.V.08 August 2006 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN 8 August 2006 PYATEROCHKA HOLDING 'BB-' RATING AFFIRMED BY STANDARD & POOR'S On 3 August 2006, Standard & Poor's Rating Services affirmed its 'BB-' long-termcorporate credit rating for Pyaterochka Holding N.V. At the same time, Standard& Poor's affirmed its 'BB-' long-term corporate credit and 'ruAA-' Russianational scale ratings for Pyaterochka's operating subsidiary, OOO Agrotorg. Inaddition, the 'ruAA-' ratings on the senior unsecured and senior secured debtissued by Pyaterochka Finance have been affirmed. All Pyaterochka Holding N.V. ratings were removed from CreditWatch with negativeimplications, where they had been placed on April, 12, 2006, followingPyaterochka's announced acquisition of Russia's leading supermarket chainPerekrestok (not rated). The affirmation reflects the view that the increase in financial risk after themerger with Perekrestok, as a result of increased leverage, is offset by theimprovement in the group's business profile through economies of scale,multi-format retail concept and strong competitive position. PyaterochkaHolding N.V. is now Russia's largest grocery retail network, operating in amarket with high growth prospects and limited concentration. In addition, thecompany plans to progressively restore a less-aggressive leverage profile. The merger with Perekrestok has increased the size and scope of the company'soperations. There are immediate benefits in terms of purchasing synergies andincreased flexibility in real-estate management. In the longer term,Pyaterochka Holding is also likely to benefit from savings arising from theintegration of the logistics and IT systems of the two chains. Finally, theintensification of the company's regional expansion should help to improveprofitability, given the company's existing infrastructure. Management agrees with Standard and Poor's decision. Vitaliy Podolskiy, GroupChief Financial Officer commented, "The financial markets have already recognized the improved financial profile ofthe merged business - our recent $800 million syndicated loan was welloversubscribed and our overall cost of funding since the merger is markedlylower. While Pyaterochka Holding does not have immediate plans for new internationalcapital market issues, Standard & Poor's decision will certainly support thecompany's future plans to enter the international capital markets as earlier asnext year to improve further it's capital structure and continue to fund itsambitious expansion programme." Moody's rating decision is expected to be announced in the near future. - End - Note to Editors: Pyaterochka Holding N.V. is Russia's largest food retailer in terms of sales.The group has 391 company-managed "Pyaterochka" soft discount stores located inthe Moscow (187), St. Petersburg (185) and Yekaterinburg (19) areas, and 133company-managed "Perekrestok" supermarkets across 14 regions of Central Russiaand Ukraine as of 30 June 2006. Pyaterochka and Perekrestok have merged their operations as of 18 May 2006 tocreate the clear leader in the Russian food retail market. Pyaterochka's 2005 net sales (pre-merger) reached USD 1,359 million, with grossbanner sales in 2005 of over USD 2 billion. Perekrestok net sales reached USD1,015 million in 2005. Pyaterochka's Q1 2006 net sales (pre-merger) reached USD 439 million, andPerekrestok Q1 2006 sales were USD 323 million. As of 30 June 2006, franchisees operated 479 Pyaterochka branded stores in 20regions of Russia, Ukraine and Kazakhstan. Perekrestok has 10 conveniencestores operated by franchisees in the Moscow area. - End - Enquiries to: Pyaterochka Holding NV Tanja Djurdjevic Investor Relations Tel +7 495 724 6414 Email ir@e5.ru This information is provided by RNS The company news service from the London Stock Exchange