The agency said the rating action is mainly driven by Petrol’s weak liquidity position and rising refinancing risk, predominantly related to the EUR 100 million notes. File photo
International credit agency Fitch has placed Bulgaria-based fuel distributor Petrol AD's Long-term Issuer Default Rating (IDR) of 'CC' on Rating Watch Negative (RWN).
Fitch has also placed Petrol AD's senior unsecured rating of 'CC' for its EUR100m notes, due in October 2011, on RWN.
The agency said the rating action is mainly driven by Petrol’s weak liquidity position and rising refinancing risk, predominantly related to the EUR 100 million notes.
Fitch assumes that the cash spent on the purchase of Petrol shares in 2008 - following a disposal of an important part of the company’s petrol station network to Lukoil Bulgaria - will not be returned to Petrol. Therefore, this cash will not be available to support the company's financial position before the notes mature.
Fitch also said it was concerned about Petrol’s weak corporate governance standards.
“The negative pressure on Petrol AD's ratings may rise further if the dispute between the two main shareholders of Petrol Holding, the owner of Petrol AD, results in a major negative impact on the company's business and financial profile, including its liquidity position”, according to the statement.