Landkom land back drops to 66 ths ha, CEO steps down

Landkom International (LKI LN) issued a company update on Friday, reporting that its land bank decreased from 115 ths ha to 66 ths ha, 45.8 ths of which are registered under its name, with an average lease term of nine years. Landkom said that a recent detailed audit located three separate and previously unrecorded land lease agreements concluded in late 2007 and early 2008, which entail additional financial liabilities. Landkom estimated that it owes about USD 2-2.5 mln pursuant to the liabilities, one third of which has already been paid. The company said that it is in negotiations to resolve the issue and that if the talks fail, it might give back 10.3 ths ha. Landkom also announced that Richard Spinks, who the company had previously announced would step down as CEO after this year’s harvest, has also left the board, with immediate effect.  Additionally, Landkom said it is in preliminary discussions on a potential merger with a Ukrainian farming operation, but did not release further details on the talks. At the same time, Landkom reported that it completed its oilseed rape harvest, culling 39.4 ths mt of the crop (yield of 2.7 mt/ha). Andriy Gostik: While news of the company’s land bank reduction and looming corporate restructuring lack detail for a straightforward interpretation, they are definitely worrisome. The replacement of the CEO also raises lots of questions. It looks like the company has some internal issues that could put its business under threat. Further information on the merger should bring more light to Landkom’s situation.