Bakhmatyuk repays USD 507 mln, awaits NBU reply on debt offer

Oleg Bakhmatyuk, the sole owner of Ukrlandfarming (UKRLAN)
and majority shareholder of Avangardco (AVINPU, AVGR LI), is still awaiting
feedback from the National Bank of Ukraine (NBU) on his offer to restructure
his debt, he said in an interview to Interfax-Ukraine published on Feb. 13. He
said he is ready to repay debt to the NBU and the Deposit Guarantee Fund during
the next ten years, suggesting a minor interest rate without any more
specifics. He estimates his current debt to the NBU and the guarantee fund at
UAH 19 bln (though Ukrlandfarming mentioned a UAH 20.6 bln debt a year ago).
Bakhmatyuk complained to Interfax that the NBU has not responded to his offer,
again mentioning resistance from Valeria Gontareva, the de jure NBU head. The
fund is also not cooperative because the NBU is “heavily influencing it by
managing its supervisory board,” he said.

Also Bakhmatyuk reported he is in negotiations with
the external creditors of Ukrlandfarming, claiming that the “loans of external
creditors are secured” and in fact “Bakhmatyuk is a hired manager in service of
creditors.” On top of that, he stated that he has repaid USD 507 mln to
external creditors “in recent years.”

Alexander Paraschiy: It is very
strange to hear that Gontareva, who has not been running the NBU since May
2017, remains the key troublemaker for Bakhmatyuk. Also it is strange to hear
that the NBU is heavily influencing the guarantee fund. In fact, just two of
the five members of the fund’s Administrative Council represent the NBU. Most
likely, the core reason of their resistance to the deal with Bakhmatyuk is a
lack of trust. Perhaps this is also a reason why Ukrlandfarming and Avangardco
have failed, so far, to agree on debt restructuring with their Eurobond
holders.

We continue to believe that any restructuring deal
should end up with the presence of major creditors in the controlling bodies of
Ukrlandfarming and Avangardco. And we are surprised to hear from Bakhmatyuk
that some “international creditors” are already “controlling” the business that
Bakhmatyuk is “managing”. Such claims don’t look credible, but Bakhmatyuk could
be hinting that some positions in his companies’ controlling bodies are already
occupied by creditors. Also it was strange to read that  Bakhmatyuk has
repaid over USD 500 mln to some creditors in recent years, whereas since late
2016, it has not been paying even coupons on its USD 760 mln in bonds.

All in all, we did not find any new signs of
Bakhmatyuk’s readiness to agree on debt restructuring in the interview, at
least with the bondholders, the NBU and the guarantee fund.