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Concorde Capital Research: Ukrlandfarming owner hopes to resolve debt issues with NBU under new head

March 16, 2018 | Cbonds

Agricultural tycoon Oleg Bakhmatyuk is striving to find common ground with Ukraine's central bank under the management of its newly appointed governor Yakiv Smoliy, the businessman told the Interfax-Ukraine news agency on March 15. Last year, Bakhmatyuk - the owner of farming holding Ukrlandfarming (UKRLAN), top egg producer Avangardco (AVINPU, AVGR LI), as well as two failed Ukrainian banks - blamed former central bank head Valeriya Gontareva for a personal vendetta against him that has prevented him from resolving their conflict. In particular, he complained that the central bank was ignoring his proposal to restructure all his debt.

With its new head, Bakhmatyuk said he is hoping for a compromise that will allow him to repay over UAH 10 bln to the central bank in ten years. Bakhmatyuk claims that under such a scenario, the central bank will get a better debt recovery rate than selling it “on the conditions of the Deposit Guarantee Fund,” or at about 10% of par.

In her outgoing speech to parliament on March 15, Gontareva made particular mention of Bakhmatyuk as the biggest debtor to the central bank who owes UAH 10.2 bln (about USD 380 mln) in refinancing loans took by his two failed banks.

Alexander Paraschiy: In our view, Bakhmatyuk’s debt issue to the central bank should be considered as part of the resolution of his total debt to all creditors and government institutions, which is at least USD 1.9 bln (based on Bakhmatyuk’s claims) and up to USD 3 bln (based on rumors). The only source of recovery of all the debts is Bakhmatyuk’s Ukrlandfarming, which generates no more than USD 150 mln in annual free cash flow. We do not expect Smoliy will adopt any fast solution to the central bank's claims against Bakhmatyuk. We also see no value in the Eurobonds of Ukrlandfarming and Avangardco.

Issue: Ukrlandfarming, 10.875% 26mar2018, USD

StatusDefaultCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
redemption defaultYesUkraine03/26/2018500,000,000 USD-/NR/Withdrawn

Company: Ukrlandfarming

Full company nameUkrlandfarming Public Limited Company
Country of riskUkraine
Country of registrationCyprus


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