ULF offers 50%-70% haircut to creditors, deputy director says

Ukrlandfarming (ULF, UKRLAN) is going to update its
debt restructuring proposal for all its creditors, deputy CEO Ihor Petrashko
told the Interfax-Ukraine news agency on Nov. 5. The company will base its
offer on its forecasted cash flow, which the company will update by the end of
2018, he said. The company’s last offer assumed a 70% haircut for unsecured
creditors and 50% for secured, he said, as well as extending the loans for ten
years at an interest rate of 8%. “Most international creditors are not happy
with that, but they treat it with understanding because this is an objective
reality,” Petrashko commented. He also said ULF’s total debt is close to USD 2
bln, of which the principal amount is about USD 1.6 bln.

Alexander Paraschiy: The
restructuring terms that the company is offering are slightly better than what
we estimated in our July 4 report on ULF (65% haircut, on average, paying
3.0%-6.5% interest in ten years). In our view, ULF’s ultimate offer should
follow not only a revision of its business model, but also some deal between
major shareholder Oleg Bakhmatyuk and Ukraine’s state bodies, to whom he owes
about USD 0.5 bln of debt that is not captured by the ULF balance sheet.

In any case, the offered ULF restructuring parameters
imply a better recovery rate than was earned, on average, by the creditors of
agricultural holding Mriya. In particular, we estimated that – assuming a 25%
discount rate – ULF creditors would have an NPV of debt flow close to 11% of
par (based on our assumptions, or slightly more based on the announced offer),
while Mriya’s unsecured creditors will receive about a 7% recovery rate.