Hence in consideration of the risk involved, obligations rated in this category indicate a strongly reduced stability combined with a very high risk of default. The CC Rating is based on the evaluation of the issuer (Issuer Rating) as well as on the issued bond (Recovery Rating) to payments on the coupon and nominal value .

Significant Risk Factors
The main reasons for the CC rating lie in significant qualitative and quantitative risk factors that increase the default risk significantly from the investor’s point of view. According to Scope a weak management track-record in the composition as well as in the operational activities contribute to the negative assessment on the qualitative level. From the intrinsic point of view the stable market development of the Acazis AG combined with long-term lease contracts are seen positively. However, these factors are strongly mitigated by the relatively high political, structural and demographic instability in Ethiopia. Additional risks arise from the company’s only limited operational activities to date.

The current situation of the Acazis AG as a holding company as well as its operational subsidiary’s Flora Eco Power is largely characterized by the previously generated losses over the past few years that led to the consumption of equity. So far, cash-flow generation from operational activities was impossible. To finance current expenses external liquidity appears to be urgently required. Although no financial results for the fiscal year 2012 have been published to date, Scope anticipates an annual loss of about 1,5 Mio. EUR.

Furthermore, there are additional risks concerning the bond issued in 2012. The fact that the company does not possess any valuable assets and that the bond is not secured otherwise, increases the risk profile considerably from the investor’s point of view.

Based on the CC rating implying a very high probability of default, Scope assigns a stable outlook. Due to the generated losses in 2012, Scope does not believe that this will lead to improved economic stability of Acazis. Whereas management anticipates a balanced result in 2013 with earnings after taxes of 70.000 EUR, another loss of 200.000 EUR is expected in 2014. According to Scope the probability of default of the company and its bond remain at a high level.

The Acazis AG is located in Rosenheim, Germany and its subsidiary Flora Eco Power Ethiopia, which functions as the group’s operational unit, is located in Addis Abeba, Ethiopia. The group’s business activity is the cultivation of castor plants and peanuts and the operation of a mill for the production of peanut- oil and –cake.