Fitch rates Merinos B

Fitch Ratings said it assigned Merinos Hali Sanayi ve Ticaret AS local- and foreign-currency issuer default ratings of B and a national long-term rating of BBB(tur).

The outlook is stable.

The ratings reflect Merinos' growing export revenues - reaching 26% of sales from its geographically diversified markets - and its leading strong local market presence, commanding a 35% share of the market, Fitch said. The agency said it takes a credit-positive view of the company's growing economies of-scale due to a larger share of exports and the expansive sales and distribution network with 3,500 points of sale.

On balance, however, the limited-scale of the business at $181 million revenues, $39 million EBITDAR with $135 million in net debt and $372 million total assets at the end of 2005 remains a concern in regards to Merinos' financial flexibility in a downturn scenario, Fitch said. While the company has a sound operating profitability track record, the potential to raise additional debt funding or ability to service higher levels of debt will remain a function of its-scale and hence its financial flexibility, the agency said.

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