Avangardco pays scheduled October coupon on its Eurobonds

Ukrainian egg producer Avangardco (AVGR LI), a subsidiary of Ukrlandfarming (UKRLAN), reported it paid the USD 2.7 mln coupon on its outstanding USD 200 mln in Eurobonds (AVINPU) that mature on October 2018. The company will also add payment-in-kind interest of USD 8.0 mln for the outstanding principal of the Eurobonds, in line with the Eurobond restructuring terms.

Igor Zholonkivskyi: Following its weak 1H16 financial results (EBITDA at negative USD 22.6 mln, net cash flow at negative USD 0.8 mln), we expected that Avangardco might struggle with paying its October coupon, so the very fact the company has managed to stay on schedule can be viewed as positive. However, after an extended trough in 1H16, egg prices did not recover in 3Q16, which will continue to weigh on the company’s fundamentals and liquidity in the mid-term perspective. We believe the company has high chances of further restructuring these Eurobonds, which could have principal of USD 236 mln by October 2018. We reiterate our negative view on Avangardco’s Eurobonds.