I. STATEMENT ON RATING
Slovak rating agency confirms the following ratings for the Town of Snina:
| Long-term crown rating | BB- (stable outlook)
|
| Long-term FX rating | B- (stable outlook)
|
| Short-term rating | S3
|
For the category of transactions in Slovak crowns the Town of Snina was assigned the long-term rating of BB- (stable outlook). In the category of transactions in foreign currencies the Town of Snina was assigned the rating of B- (stable outlook). The short-term rating of the Town of Snina is S3, which is the best possible short-term rating for an entity with a long-term rating of BB-.
Justification:
- The Town of Snina currently does not have any development concept elaborated for the town for the new period of office and the creation of such is not expected until 2004. In the framework of town and regional development in the field of investment priorities, it plans to continue to support the activities related to tourism. By way of the association Horný Zemplín the town is involved in the implementation of the project Development of the Micro-region 'Sninské Rybníky' with an overall investment of EUR 2 million. The project will be financed from the PHARE funds, from the state resources while the additional financing resources consist of town financial resources gained from credit resources in the amount of 9.6 million SKK.
- Slovak Rating Agency positively regards the efforts of the town management to install new qualitatively improved relations within the Town Hall. We see a key improvement in better communication links between individual organisational units of the Town Hall and improved co-operation with the new Town Council.
- The economic results of the town ended 2002 with a surplus of SKK 5,148,000, which was achieved thanks to the non-depletion of capital expenses due to constraints on the investment activities of the town. SRA perceives as negative the growth in receivables to the end of 2002 compared with the preceding year by SKK 108 million in absolute terms to the volume of SKK 148 million, due to the clearing of penalisation invoices from previous years. To the end of 2002 the town recorded liabilities more than 60 days overdue worth SKK 245,000, which had increased to SKK 876,000 as of 30 September 2003, although these liabilities are recorded against companies to which settlements have been halted from title of non-performance of contractual obligations, or where the settlement of these liabilities is disputed.
- In the past the town assumed a surety commitment for a private company worth SKK 12.5 million in connection with implementation of a publicly beneficial investment aim. SRA negatively assesses the situation that the town does not have sufficiently secured the return of funds, which it would have to pay as the guarantor if the debtor were to default. The town is informed about settlement of repayments only after the due date passes, which means it has limited space for raising the required funds.
Please don't hesitate to address your questions to autner@slovakrating.sk, or call +421 2 5464 5151.
Slovak Rating Agency
Bratislava, 29 October 2003