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Concorde Capital Research: Ukrlandfarming offers 50%-70% haircut to creditors, deputy director says

November 06, 2018 | Cbonds

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.

Issue: Ukrlandfarming, 10.875% 26mar2018, USD

StatusDefaultCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
redemption defaultYesUkraine03/26/2018500,000,000 USD-/NR/Withdrawn

Company: Ukrlandfarming

Full company nameUkrlandfarming Public Limited Company
Country of riskUkraine
Country of registrationCyprus


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