Ukraine central bank to enforce recovery of UAH 1.5 bln from Zhevago

The National Bank of Ukraine (NBU) obtained an
enforcement order to recover UAH 1.539 bln (USD 66 mln) from Kostyantyn
Zhevago, the majority owner and former CEO of Ukraine’s largest iron ore pellet
exporter Ferrexpo (FXPO LN), the central bank said in a Dec. 26 press release.

The order is due to the Oct. 1 court decision to enforce
Zhevago’s personal commitment to repay an NBU refinancing loan to his former
bank, Finance & Credit (F&C), which was declared insolvent in 2015. The
Oct. 1 court decision took effect recently after Zhevago had failed to appeal
it in the second-tier court.

The NBU expects the amount owed to be partially
enforced against Zhevago’s personal funds, as well as against the assets of
some of the companies controlled by Zhevago that were surety providers, the
release said. The total amount the NBU is owed in relation to all the
refinancing loans it provided to F&C bank is UAH 6.6 bln (USD 283 mln),
according to the release.

Zhevago has filed an appeal with the Supreme Court of
Ukraine after its claim was rejected by the second-tier court, according to a
Dec. 26 report by Interfax-Ukraine.

Dmytro Khoroshun: We cannot
rule out that some Ferrexpo assets might be subject to the NBU’s enforced
recovery of Zhevago’s commitment related to the F&C bank refinancing loan.

Recall, in August 2015 Ferrexpo Poltava Mining signed several suretyship agreements
for various loans extended by F&C bank to third-party companies provided by
Zhevago. These suretyship agreements were the reason why Ferrexpo was unable to
recover USD 128 mln it had on deposits at the failed F&C bank.

Ferrexpo might easily clarify the situation by
confirming whether or not its assets are currently, or have ever been, surety
providers under any third-party loans or commitments (such as Zhevago’s
personal guarantees).

We also cannot rule out that the NBU might attempt
to enforce the recovery of Zhevago’s commitment against his holdings in
Fevamotinico S.a.r.l. that held a 50.3% stake in Ferrexpo as of end-2018.