Bakhmatyuk in talks to sell control in ULF, NBU conflict impedes

Oleg Bakhmatyuk, the main shareholder of the largest farming company Ukrlandfarming (UKRLAN), is in active talks to sell his stake of more than 50% in the company, he said in an interview to the biz.liga.net news site on Jan. 23.

The potential bidders are “Chinese and some American investors” but they are intimidated by the current conflict with the National Bank of Ukraine (NBU), he claimed. He stressed again that NBU Head Valeria Gontareva is refusing to agree on the debt resolution of its two failed banks for personal reasons.

In the interview, Bakhmatyuk provided two different estimates of the value of Ukrlandfarming. In one part, he said the total value of the company’s assets is USD 2.5 bln (based on the amount of spent investments, we assume), while in another part he confessed that its value today is less than the debt amount (which is about USD 1.5 bln).

Alexander Paraschiy: In our research published in August 2016, we estimated the fair value of Ukrlandafarming’s assets at USD 0.8 bln, which is roughly half of the amount of its total debt. This is broadly in line with Bakhmatyuk’s assessment that the company’s value is below USD 1.5 bln. In such circumstances, we doubt that there is a real interest to any equity stake in Ukrlandafrming, unless the company implements a heavy debt restructuring, including a face value haircut.

We agree that the NBU’s attack campaign in the media can hurt Bakhmatyuk’s image and weaken his chances to agree on a deal with potential investors. At the same time, we believe his image and chances to get a deal are weak, regardless of the pressure from the NBU. We continue to believe that Bakhmatyuk’s claims that his conflict with the NBU has a personal pretext is an exaggeration aimed at blaming all of Ukrlandfarming’s current hardships on “attacks from the NBU head.” And we continue to expect Ukrlandfarming and Avangardco (AVINPU) will start tough talks on debt restructuring very soon.