Moody's downgrades Alta

Moody's Investors Service said it downgraded the national scale rating of Czech Republic-based Alta a.s. to Baa2.cz from Baa1.cz following a review of the company's 2005 financial results. The outlook is stable.

The agency said the downgrade reflects Alta's weak cash generation resulting from its iron-ore trading exposure and its weakened credit metrics as a consequence of its acquisition of the Kurim Group and the resulting impact on the financial profile of the group. It also reflects Moody's expectation that Alta's business model will be increasingly challenged going forwards.

Alta's market position has benefited from its expertise as an intermediary in the import of iron ore and export of capital goods and the traditionally more challenging and opaque trading procedures in its core markets of Russia, Ukraine and Belarus, where it has specific experience and occupies a strong niche position. However, the agency believes Alta's niche market will be challenged as the operating environment for these activities improves, thereby reducing the need for intermediaries. The acquisition and vertical integration of the machinery manufacturing business of the Kurim Group is seen as a first step towards mitigating this growing challenge.

Net debt to EBITDA was 3.7 times for 2005.

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