Ukraine plans to sell VAB Bank loans to Ukrlandfarming

Ukraine’s Deposit Guarantee Fund announced on Dec. 28 that it plans to hold an auction to sell part of its loan portfolio in the failed VAB Bank. In particular, it will offer to the public five loans extended to farming companies that are subsidiaries “of the most powerful agricultural holding,” in an indirect reference to Ukrlandfarming (UKRLAN), which is linked to VAB Bank through their common majority shareholder, Oleh Bakhmatyuk. They owe the bank UAH 955 mln and did not service their obligations for more than one year.

Agricultural machinery at a total appraised value of UAH 1.3 bln (over USD 100 mln) served as collateral for the loans. It includes 439 tractors and harvesters and more than 150 units of other vehicles and equipment, located in the Poltava, Kyiv and Donetsk regions.

Andriy Perederiy: The mentioned agricultural machinery represents about 25%-30% of Ukrlandfarming’s total machinery park, we estimate. Logic suggests that Ukrlandfarming should be the main candidate to purchase the loans from the Fund, possibly at a handsome discount. If the holding fails to purchase the loans and loses the related collateral, this will negatively affect its farming operations in the next season, in our view.