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Concorde Capital Research: ULF creditors ask Ukraine officials to discuss Bakhmatyuk issues

November 26, 2019 | Cbonds

The leading international creditors of Ukrlandfarming (UKRLAN) sent a letter to Ukraine cabinet officials requesting a discussion of the possible consequences on the company and its obligations following the “legal issues” related to Oleg Bakhmatyuk, the company’s owner, media reported. The creditors said they “are concerned about the possible negative consequences for the collective exposure of the international creditor group,” Debtwire reported on Nov. 24, citing the letter sent earlier this month. The creditors expressed their readiness to visit Kyiv to discuss with the government members all the issues, Interfax-Ukraine reported on Nov. 26. The creditors are represented by the Gramercy hedge fund, the U.S. export credit agency US-EXIM, Switzerland-based Pala Assets and Danish export credit agency EKF, Debtwire reported.

Recall, the National Anti-Corruption Bureau of Ukraine (NABU) named on Nov. 13 Oleg Bakhmatyuk a suspect in a criminal case of conspiracy involving a UAH 1.2 bln loan that VAB Bank (then controlled by Bakhmatyuk) took from the central bank in October 2014. Local media reported on Nov. 25 that Bakhmatyuk was put on a national search list last week.

Alexander Paraschiy: As we discussed in our Nov. 25 report on Ukrlandfarming, we see a high chance that Bakhmatyuk and the NBU will be able to prove the absence of conspiracy, which should remove the current legal pressure from NABU. However, this does not remove the risk of pressure on him from other law enforcement bodies. Creditor concern is apparent, as in our view, Ukrlandafming is not a sustainable business: if Bakhmatyuk loses control over the company, it can split apart and thereby bring little recovery value to the company’s debt. So far, there is no apparent reaction from the government on creditors’ concerns, so we conclude that a risk of the worst-case scenario development for Ukrlandafming is high.

Issue: Avangard Agroholding, 10.0% 29oct2018, USD

StatusDefaultCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
redeemedYesUkraine10/29/2018213,725,000 USD-/-/CC

Company: Avangard Agroholding

Full company nameAgroholding Avangard PJSC
Country of riskUkraine
Country of registrationUkraine
IndustryAgriculture

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