Ukrlandfarming, Avangardco hire new adviser to restructure debt

Ukrainian agricultural holdings Ukrlandfarming
(UKRLAN) and Avangardco (AVINPU, AVGR LI) reported on July 17 they have hired
UK-based advisory firm Ziff-Ivin Associates to help them restructure their
Eurobonds and some of their banking loans. The two holdings are controlled by
Ukrainian Oleg Bakhmatyuk.

Recall, Ukrlandfarming and Avangardco failed to pay
their coupons on Eurobonds, which were due in late March and late April,
respectively. The companies are in default on their Eurobonds since late April
and mid-May, respectively, and made no official announcement since early May on
the matter. In late May, Bakhmatyuk told local media he will come
back to creditors with an offer by end-June.

Alexander
Paraschiy: Hopefully, with the hiring of an additional debt
adviser, the companies will accelerate their talks with creditors. We expect the
talks will be tough, lasting at least a couple of months, given that
Bakhmatyuk’s starting position is rather aggressive. He is offering a 50% haircut
reportedly, in addtion to a radical interest rate cut and debt extension.

We continue to believe that
any deal with Bakhmatyuk should include increased creditor control over
Ukrlandfarming operations and strategy, and should be preceded by due diligence
by its creditors. More details can be found in our June 9 report on ULF.