ULF bondholders approve coupon partial capitalization in 2016

The bondholders of Ukrlandfarming (UKRLAN) approved a proposed restructuring at a meeting held on April 21, the company announced the same day. 86.7% of bondholders signed up for the meeting, out of which 99.9% voted in favor of restructuring, the company said. According to the newly approved terms, Ukrlandfarming will pay a semi-annual coupon of 1.25% in cash (of a total 5.4375% due semi-annually) on April 22 and September 26 and will capitalize the rest. Among other terms are cross-default waivers on certain loan facilities, reduced requirements for surety providers, and a CapEx limit to USD 75 mln. Following the successful vote, the company will pay today a 0.125% consent fee to those who voted in favor before the deadline of April 19. 

Roman Topolyuk: Once capitalization of interest occurs as agreed upon, the total notes outstanding, maturing in 2018, will increase by 8% to around USD 542 mln. The company has bought itself some time with this decision ahead of its looming liquidity event, or the maturity of USD 778 mln in debt, consisting of UKRLAN notes and the notes of the company’s egg-producing subsidiary, Avangardco (AVINPU). With Ukrlandfarming struggling to break even at its free cash flow level, another bond restructuring is inevitable. We reiterate our bearish view on UKRLAN Eurobonds.