Court freezes charge of Ukrainian Railways debt to VR Global

Kyiv Economic Court ruled on May 13 to stop a possible
enforcement of the charge from Ukrainian Railways (RAILUA) of debt to VR Global
Partners under eight rulings of Ukrainian courts, finbalance.com.ua news site
reported on May 18. Recall, in 2019, VR Global Partners purchased Ukrainian
Railway’s debt to Prominvestbank with a par amount of USD 153 mln. VR Global has
already won litigations against Ukrainian Railways in appellate courts and the
Supreme Court (six rulings implying the company has to pay about USD 140 mlnequivalent to VR), as well as in first-tier courts (two rulings for USD 22 mln,
no need to pay before the appellate courts confirm such obligations).

According to the May 13 ruling, Ukrainian Railways is
questioning the validity of the sale of its debt from Prominvestbank to VR
Global Partners. The company insists that the deal was a “factoring agreement”,
which VR Global Partners does not have the right to do, according to Ukrainian
legislation. Based on this, Ukrainian Railways demands that the debt purchase
agreement be cancelled. The court decided to freeze the enforcement of payments
to VR Global as a preemptive measure while the case is heard.

Alexander Paraschiy: With this
claim, Ukrainian Railways is doing everything to postpone the repayment of the
Prominvestbank/VR debt, which looks logical, taking into account that the
company’s financial plan for 2021 does not foresee such payments. The
postponement is critical for the company whose liquidity is barely enough to
service its scheduled obligations. Meanwhile, we are looking forward to hearing
any update from the company on the restructuring or repayment of USD 116 mln debt to Sberbankwhich is due in two weeks.