Concorde Capital Research: ULF owner may offer debt restructuring in about 6 weeks

May 24, 2017 - Cbonds

 

The owner of Ukrlandfarming (ULF, UKRLAN) and majority owner of egg producer Avangardco (AVINPU, AVGR LI) Oleg Bakhmatyuk is counting on progress in the debt restructuring negotiations of the companies in 1 – 1.5 months, according to his interview with Interfax-Ukraine published on May 23. “We would be able to agree” with creditors, he said, “if not for the factor of Valeriya Gontareva” (the head of Ukraine’s central bank, the NBU). Now that Gontareva has de-facto resigned from her post, Bakhmatyuk hopes for the “normalization” of his relationships with the NBU.

Commenting on the delayed coupon payments on ULF and Avangardco Eurobonds, he said the holding “directed all the free funds to complete the sowing campaign,” also claiming that “creditors understand this.”

ULF issued an open letter to Ukraine’s top politicians in January, asking them to protect the holding from pressure from Gontareva. Before that, the NBU claimed that Bakhmatyuk owes UAH 38 mln to state banks and institutions. Also, ULF and Avangardco reported in March and May that they are not going to pay coupons on their Eurobonds. Now both companies are in default on their notes.

Alexander Paraschiy: It is particularly strange to hear from Bankhmatyuk that Avangardco did not pay its USD 5 mln coupon due in early May because of the need to do a sowing campaign – we heard nothing about Avangardco’s crop farming operations. Such statements only confirm poor corporate governance practices inside ULF. We do not believe Bakhmatyuk will be able to agree on any debt restructuring with the NBU in the coming month or two. Therefore, we do not share ULF owner’s optimism about any soon debt restructuring offer. We continue to believe that ULF and Avangardco are neither trustworthy nor investable companies.
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Issuer: Ukrlandfarming
Issuer profile:
The Ukrlandfarming Group is the largest Ukrainian vertically integrated agricultural holding company, managing 654 thousand hectares of highly fertile black soil, the largest stock of black soil in t... more
Outstanding issues:
1 issuesUSD500,000,000
Issuer rating:
S&P Global RatingsCC/NegativeForeign Currency LT04/01/2015
S&P Global RatingsCC/NegativeLocal Currency LT04/01/2015
Fitch RatingsWithdrawn/LT Int. Scale (foreign curr.)03/26/2015
Fitch RatingsWithdrawn/LT Int. Scale (local curr.)03/26/2015
Fitch RatingsWithdrawn/National Scale (Ukraine)03/26/2015