Mriya finalizes its debt restructuring process

Ukraine farming company Mriya (MRIYA) announced on
Aug. 21 it has successfully closed its exchange offer that is widely understood
as finalizing the company’s debt restructuring. As a result, the company’s
total debt has been reduced to USD 0.31 bln from USD 1.1 bln. The total debt
after restructuring consists of the principal amount of USD 208.1 mln in
secured amortizing restructuring notes, USD 46 mln in secured debt, USD 46 mln
in working capital loans and USD 6.1 mln in new equipment leasing.

As a result of the exchange offer, all Mriya notes
(the USD 400 mln principal amount due 2018 and USD 71.6 mln principal amount
due 2016) and other accepted claims are to be exchanged into restructuring notes
of the principal amount of USD 208.1 mln due Dec. 2025, the company’s two class
shares (A class in the amount of 0.409 mln shares and B class – 1.01 mln
shares) of GBP 0.01 each and recovery certificates in the principal amount of
EUR 761.5 mln.

Andriy Perederey: The company
finalizing its restructuring process is positive for its operating segment,
where the company has had a lack of working capital financing in recent years.
This creates the ability to finance working capital in full that could influence
crop yields and boost operating efficiency. Based on the company’s information
about land under crops and average Ukrainian farm yields, we expect the
company’s EBITDA in 2018 will be at the level of USD 25-26 mln.

If such a level of EBITDA will be preserved in
future years (and assuming 100% cash conversion), it will be hard for the firm
to cope with servicing its restructured bond (in the amount of USD 208 mln) to
be repaid by 2025. We continue to abstain from rating Mriya’s bonds.