ULF creditors ask Ukraine officials to discuss Bakhmatyuk issues

The leading international creditors of Ukrlandfarming
(UKRLAN) sent a letter to Ukraine cabinet officials requesting a discussion of
the possible consequences on the company and its obligations following the
“legal issues” related to Oleg Bakhmatyuk, the company’s owner, media reported.
The creditors said they “are concerned about the possible negative consequences
for the collective exposure of the international creditor group,” Debtwire
reported on Nov. 24, citing the letter sent earlier this month. The creditors
expressed their readiness to visit Kyiv to discuss with the government members
all the issues, Interfax-Ukraine reported on Nov. 26. The creditors are
represented by the Gramercy hedge fund, the U.S. export credit agency US-EXIM,
Switzerland-based Pala Assets and Danish export credit agency EKF, Debtwire
reported.

Recall, the National Anti-Corruption Bureau of Ukraine
(NABU) named on Nov. 13 Oleg Bakhmatyuk a suspect in a criminal case
of conspiracy involving a UAH 1.2 bln loan that VAB Bank (then controlled by
Bakhmatyuk) took from the central bank in October 2014. Local media reported on
Nov. 25 that Bakhmatyuk was put on a national search list last week.

Alexander Paraschiy: As we
discussed in our Nov. 25 report on Ukrlandfarming, we see a high chance that
Bakhmatyuk and the NBU will be able to prove the absence of conspiracy, which
should remove the current legal pressure from NABU. However, this does not
remove the risk of pressure on him from other law enforcement bodies. Creditor
concern is apparent, as in our view, Ukrlandafming is not a sustainable
business: if Bakhmatyuk loses control over the company, it can split apart and
thereby bring little recovery value to the company’s debt. So far, there is no
apparent reaction from the government on creditors’ concerns, so we conclude
that a risk of the worst-case scenario development for Ukrlandafming is high.