Ukrlandfarming doesn’t pay coupon, prepares proposal to bondholders

Ukraine’s largest farming company Ukrlandfarming (UKRLAN) announced on March 30 that it is in the process of preparing a proposal in resprect of its USD 500 mln notes, maturing in 2018. The proposal will include a request to restructure the coupon payment, which was due on March 29, but was not paid.

Roman Topolyuk: The development confirms our understanding that Ukrlandfarming is facing a gap between own operating cash flow and scheduled debt service payments. The arrest of CHF 122 mln receivables in early March, according to the legal claim of its former partner Nibulon, has contributed to the company’s liquidity crunch. We expect the company will propose reducing the coupon on these notes (via plain haircut or capitalization) and possibly extend the principal from 2018 to a later period. We reiterate our bearish view on Ukrlandfarming’s notes.