Ukrlandfarming initiates debt restructuring to Oschadbank

Three companies related to Ukrlandfarming (ULF,
ULRLAN) and Avangardco (AVINPU, AVGR LI), and their lender Oschadbank (OSCHAD),
officially registered on Aug. 6 their intention to restructure debt under the
mechanism of a law on financial restructuring, the Secretariat on Financial
Restructuring reported the same day. The announcement does not contain any
information on the size of the obligations of ULF or the possible parameters of
the restructuring deal.  Preliminary deal parameters may appear in one
month, according to the comments of Ukrlandfarming top manager Ihor Petrashko
to Interfax-Ukraine.

Alexander Paraschiy: This indicates ULF and Oschadbank have preliminary agreed to resolve
their debt, whose par value we estimate at over USD 100 mln. Theoretically,
other local lenders of Ukrlandfarming could join the deal, e.g. another state
bank Ukreximbank (EXIMUK). As we highlighted in our July report on ULF, a
haircut is unlikely as a part of the deal with state banks. The news is
positive for Oschadbank and looks neutral for the bondholders of ULF and
Avangardco, which have yet to agree to a bond restructuring. For ULF to sustain
itself as a business, it’s important that the owner Oleg Bakhmatyuk reaches
some restructuring deal with state entities (the National Bank of Ukraine and
the State Deposit Guarantee Fund) whom he owes over USD 700 mln, we estimate.