It's no secret that the current head of the Presidential Administration, Boris Lozhkin, is a billionaire. But few know that it wasn't just the young oligarch Kurchenko who made him wealthy, but also the fugitive Minister of Defense, Klymenko.
Criminal cases and bank freezes didn't stop controversial businessman Serhiy Kurchenko from repaying early the billion he borrowed to purchase Boris Lozhkin's media empire, writes Fedor Orishchuk on the Glavkom website. The author uncovered details of one of the largest deals in the information market over the past five years, which resulted in a number of popular media outlets falling into the hands of Viktor Yanukovych's "Family."
Next year, Presidential Administration Chief Boris Lozhkin will be required to publish his 2015 income declaration. The amount he declares in this document could reveal the secret of the most important deal of his life, providing an insight into the value of the UMH Group (Ukrainian Media Holding), sold two years ago to businessman Serhiy Kurchenko. Previous declarations contained no hint of this deal, although the former media mogul himself estimated it at hundreds of millions of dollars.
Boris Lozhkin
Young billionaire Kurchenko, who made his fortune under the tutelage of former President Viktor Yanukovych's "Family," entered into negotiations with Lozhkin in the first half of 2013 and closed the deal in early 2014.
The purchase price was not officially disclosed. Lozhkin himself evasively told reporters that it was not much different from his previous valuations of his business—$450-500 million. Experts commenting to the media cited more "modest" figures, placing the upper limit at $300 million.
In addition to Boris Lozhkin, Gennady Bogolyubov and Russians Leonid Makaron and Vadim Goryaninov also owned small stakes in UMH.
So far, it can be confidently stated that the sale price was no less than $160 million (or 1,295 billion in hryvnia equivalent). This amount corresponds to the loan issued by state-owned Ukreximbank to Serhiy Kurchenko's Vetek Media Invest in October 2013. These figures appear in the court documents between Ukreximbank and the borrower, posted in the Unified Register of Court Decisions.
Perhaps this is the real price of Boris Lozhkin's media business. Another theory: $160 million is only half the amount, based on Lozhkin's interview with Forbes magazine in June 2013: supposedly, by that time, the sellers had already been paid almost 50% of UMH's value. The shareholders expected to receive the remaining amount after the audit.
However, the price of the media holding with an 11 million audience turned out not to be the biggest mystery of this deal.
UMH's portfolio includes: Forbes, Korrespondent, Arguments and Facts, Komsomolskaya Pravda, Focus, Vogue, Telenedelya, i.ua, bigmir.net, football.ua, Retro FM, Nashe Radio, Europa Plus, Avtoradio, and others.
How Klimenko helped Lozhkin and Kurchenko
An examination of Ukreximbank's legal proceedings with the borrower (Vetek Media Invest) and a host of guarantors for this loan suggests the involvement of another member of the Yanukovych "Family"—former Revenue and Duties Minister Oleksandr Klymenko—in the purchase of UMH. Furthermore, the trial materials indicate that Kurchenko nearly paid off his billion-dollar debt between 2014 and 2015, despite the seizure of his accounts by law enforcement.
As a reminder, the Prosecutor General's Office and the Security Service of Ukraine (SBU) suspect the businessman, who fled to Russia, of embezzlement and theft of state property and tax evasion. Law enforcement agencies reported the seizure of his assets worth over 1,5 billion hryvnias.
Sergey Kurchenko
According to court documents, a credit line for Vetek Media Invest was opened in late October 2013 for $80 million and UAH 639,4 million. The agreement stipulates that "the principal amount of the loan as of any date may not exceed UAH 1,295 billion (a possible deviation of up to 5% due to currency fluctuations)." The loan was issued at an annual interest rate of 18,1% in hryvnia and 10,1% in dollars. The repayment date is October 27, 2022.
In April 2015, the debt was 96% repaid: Kurchenko fully repaid the bank the dollar portion of the loan and about 600 million hryvnia.
Chronology of loan repayments to Ukreximbank:
January 2014 – 245 thousand dollars;
May 2014 – about $19 million;
August – September 2014 – $1,3 million;
October 2014 – about 60 million dollars;
From December 30, 2013 to March 20, 2015 – UAH 587,233 million.
According to Ukrexim, the remaining debt currently stands at 52 million hryvnias. As noted above, the credit line was open until 2022. Why was Kurchenko in such a rush to repay the loan?
There were reasons. The fact is that in the fall of 2014, the bank lost the collateral securing the lion's share of the loan (over $100 million).
For example, of the $160 million credit line provided to Vetek Media Invest, a third was secured by securities. These matured in October 2014, and the borrower failed to provide other collateral. The bank immediately demanded early repayment of part of the debt.
This security was “property rights to receive the nominal value of Ukrainian bearer treasury bonds, which are securities, and to receive income from unpaid coupons No. 3 and No. 4” with a maturity date of October 8, 2014.
According to court documents, the owner of this asset is the property guarantor, Ya.A. Chumak. It can be assumed with a high degree of certainty that this is Yana Andreevna Chumak, a native of Makeyevka, who, according to the state database of legal entities of Ukraine, is a co-owner of the company "Unison Corporation." Anton Klimenko, the elder brother of former Minister of Revenue and Duties Oleksandr Klimenko, who died this year, also owned a stake in this company. Chumak's career is closely tied to the brothers' activities. She serves on the board of Unison Bank, controlled by Oleksandr Klimenko, and owns 9,44% of the financial institution's shares. In the mid-2000s, she headed the human resources department at the Antalex Group (another Klimenko family asset). She even participated with them in the activities of the Donetsk regional organization "Our Ukraine" in the early days of that party.
Former Minister of Revenue and Duties, member of Yanukovych's "Family" Oleksandr Klymenko
Another $50 million (of the total credit line for Vetek) was secured by deposits in Ukreximbank of three non-resident Cypriot companies: Kviten Solution Limited, Sabulong Trading Ltd, and Quickpace Limited.
The first two deposited $20 million each in the state-owned bank, and the last $10 million. All three had deposits due in late September or early October 2014. The bank risked losing this portion of the collateral and also demanded alternative collateral from Vetek Media Invest.
It is worth noting that all three Cypriot companies had their accounts at Ukreximbank frozen since April last year as part of criminal proceedings against Sergei Kurchenko, including the activities of his company, Gas of Ukraine 2020.
Ukreximbank's management attempted to lift these seizures through the courts, but the outcome of these efforts is unknown. It was also not possible to determine whether the Cypriot owners of the funds succeeded in recovering their deposits.
Nevertheless, the lender and borrower parted amicably. As noted above, last October, Vetek Media-Invest repaid the bank $60 million in loan repayments, and by the end of March, it had almost completely repaid the debt.
Currently, legal proceedings are ongoing between the lender, borrower, and guarantors, primarily over the credit line servicing fee. Ukreximbank insists the fee is 115 million hryvnias, while Vetek Group asserts in court that the fee should not exceed three million.
Loan guarantors:
Radiorama
Trading House Delta-Invest
KP-TV
PJSC Luganspechat
"Your press is Lugansk"
Your Press - Donetsk
PJSC "Komsomolskaya Pravda - Ukraine"
Ilonit-TV
DP "Union of Implementers"
DP "Your Press - Kharkov" LLC "Your Press"
"Correspondent"
"Ukrpoligrafmedia"
After news broke of Sergei Kurchenko's purchase of UMH shares, Vladimir Fedoryn, editor-in-chief of Forbes Ukraine magazine (part of the holding company), cited three reasons for the deal: "to silence journalists before the presidential elections," "to whitewash his own reputation," and "to use the publication to resolve issues that have nothing to do with the media business."
Following a management change in the fall of 2013, the editorial policy of the holding's publications did indeed change: journalists alleged censorship. As a result, approximately 40 employees resigned from Korrespondent magazine and Forbes alone.
The shadow of former Revenue and Duties Minister Oleksandr Klymenko in this deal can only emphasize that Serhiy Kurchenko's stunning business success owes less to his business acumen than to the patronage of Yanukovych's team.
Ukreximbank earned $6,7 million and 110 million hryvnias in interest on the loan to Vetek Media Invest.
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