MirLand to delay Dec. 31 payments on series A and series B debentures

By Caroline Salls

Pittsburgh, Dec. 19 – MirLand Development Corp. plc has decided to delay the Dec. 31 repayment of principal and interest on its series A and series B debentures, according to a news release.

As a result of that decision, Moody’s Investors Service subsidiary Midroog downgraded the credit rating for MirLand’s series A, B, D, E and F bonds to B1 on a local Israeli scale while, Standard & Poor’s Maalot downgraded the credit rating of MirLand and its series A, B, C and D bonds to ilCC on a local Israeli scale.

MirLand said it is closely examining developments in the economic situation in Russia and continues to focus on its business strategy as it works to deal with the consequences of macroeconomic pressures in Russia.

According to the release, there has been a significant deterioration of the economic situation in Russia in recent months, stemming from various macroeconomic factors, which resulted from the accelerated depreciation of the ruble exchange rate against the dollar.

The exchange rate at the beginning of the year was 32.72 rubles to the dollar. In recent weeks, the exchange rate dropped to a minimum of 80 rubles to the dollar, and, as of Friday, the Russian currency is trading at 60 rubles to the dollar.

In addition, the company said the base interest rate in Russia rose sharply to 17% as of Friday from 5.5% in January 2014, with the last interest rate increase of 6.5% carried out on Dec. 16.

MirLand said the extreme currency devaluation may have severe implications on the ability of tenants to meet their obligations and thus affect the company’s financial results and liquidity.

The company said it is in contact with tenants and is providing discounts for some specific and fixed-term periods to try to deal with the extreme changes being experienced by the economy in Russia to allow them to continue to meet their financial obligations, as well as holding discussions with its subsidiaries’ financing banks.

MirLand is a Cyprus-based real estate developer that primarily functions in Russia but also has subsidiaries in Israel and Hungary.

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