SALIC completes Mriya purchase, former owner extradited to Ukraine

Saudi Agricultural and Livestock Investment Company
(SALIC) completed the deal to acquire the majority of the assets of Mriya group
(MRIYA), the company reported on Nov. 5. “The value and terms of the
transaction have not been disclosed,” the report said. Mriya will continue its
operations alongside SALIC’s other Ukraine-related subsidiary, Continental
Farmers Group.

Recall, Mriya announced in September
that SALIC is going to purchase the new bonds of Mriya Farming from their
holders as part of an acquisition in which bondholders receive in cash 53%-62%
of par value of those bonds. They were issued by Mriya Farming as part of a
debt restructuring that assumed a 88%-90% face value haircut of Mriya’s old
unsecured debt.

In related news, Deputy Prosecutor General of Ukraine
Eugene Enin announced on Nov. 5 that the former director of a top agricultural
holding has been extradited from Switzerland to Ukraine and arrested on
criminal charges of fraud, estimated at UAH 800 mln. The epravda.com.ua news
site identified this suspect as Mykola Huta, Mriya’s former CEO and majority
shareholder. It published a photo of Huta being in police custody.

Alexander Paraschiy: If the
SALIC-Mriya deal is completed under the announced terms, the holders of old
Mriya Eurobonds will recover 6.4%-7.4% of their par value. This is better than
the 4.0% recovery rate secured by bondholders that did not approve of the
restructuring offer or selected cash alternative to the new bonds. But it’s
still too little, given that they had to wait more than four years for that
recovery.

Theoretically, the former creditors may also count on
the further recovery of debt via Recovery Certificates, providing Mriya’s legal
advisors are able to recover something from the Huta family. But the recovery
rate is unlikely to be high. The fraud estimate of UAH 800 mln (or about EUR 25
mln) is 3.3% of par value of all the Recovery Certificates, but that amount may
not be recovered.

As for Mykola Huta’s extradition, it could become a
rare success for Ukraine’s law enforcement system in prosecuting and punishing
a multimillion fraud, or its latest failure.