Avangardco postpones dividend to minorities by two months

Ukraine’s leading egg producer Avangardco (AVINPU, AVGR LN) called a shareholder meeting for Feb. 25 to approve a postponement of its dividend payment to its majority shareholder, Ukrlandfarming (ULF, UKRLAN), according to the company’s Jan. 29 press release. The company explained its initiative with the wish “to ensure fair treatment of the Company’s bondholders, equity holders and banks” and provide additional liquidity to the company.

On Sept. 30, 2014, the company’s shareholders decided to pay a total of USD 29.5 mln in dividends, with ULF’s share being USD 22.9 mln and its minorities’ share being USD 6.6 mln (or USD 0.4625 per DR). The company promised to pay dividends by the end of 2014 to shareholders of record as of Oct. 14. Based on the recent press release, the company is planning to pay dividends to minority shareholders soon after the scheduled shareholder meeting, during the first week of March.

Alexander Paraschiy: At first glance, it looks like the main shareholder of Avangardco, ULF, decided to punish itself for missing the earlier deadline to pay dividends to minority shareholders (this delay, by itself, is a sign of worry). But our understanding is that ULF, as a group that fully controls the operations of Avangardco, just decided to avoid additional tax obligations that will unavoidably arise when ULF receives its dividends. From this position, it’s a wise move that will indeed save liquidity for Avangardco, as well as its parent group. Last but not least, more clarity on when minority shareholders will get their dividends is also encouraging.