TEXT-Fitch cuts Sitronics to 'CCC'; withdraws ratings
(The following statement was released by the rating agency)
Feb 05 - Fitch Ratings has downgraded Sitronics JSC's (Sitronics) Long-Term Issuer Default Rating (IDR) to 'CCC' from 'B-' with a Negative Outlook. A full list of rating actions is at the end of this release. The agency has simultaneously withdrawn all the ratings.
Fitch has withdrawn the ratings as Sitronics has chosen to stop participating in the rating process. Therefore, Fitch will no longer have sufficient information to maintain the ratings. Accordingly, Fitch will no longer provide ratings or analytical coverage for Sitronics.
Sitronics' ratings are shaped by its weak operating profile of a struggling niche IT and technology company on a standalone basis benefiting from tangible shareholder support.
Sitronics' standalone profile remains weak conforming with a 'CC' rating. The group has undergone significant re-organisation over the past 12 months, and a new round of re-organisation seems to be in the pipeline. A transformational change would be required to improve the company's standalone profile.
- Shareholder Support Strong but May Diminish
Shareholder support has been material and timely and is likely to continue. The level of support from its ultimate shareholder, OJSC Sistema ('BB-'/Stable) is likely to depend on the strategic asset composition of Sitronics. Without pre-empting the outcome of the company's ongoing re-organisation, Fitch notes that Sistema's propensity for support may diminish if Sitronics ends up with fewer strategically important assets. The 'CCC' IDR factors in Sitronics' standalone credit profile of 'CC' lifted by one notch to 'CCC' on support from Sistema.
FULL LIST OF RATING ACTIONS
Long-Term IDR: downgraded to 'CCC' from 'B-' with a Negative Outlook, withdrawn
Local currency IDR: downgraded to 'CCC' from 'B-' with a Negative Outlook,
National Long-Term Rating: downgraded to 'B+(rus)' from 'BB-(rus)' with a Negative Outlook, withdrawn
Senior unsecured debt in foreign currency: downgraded to 'CCC' from 'B-', 'RR-4', withdrawn
Senior unsecured debt in local currency: downgraded to 'CCC' from 'B-', 'RR-4', 'B+ (rus)' from 'BB-(rus)', withdrawn
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