Rumors of the possible bankruptcy of Oleg Bakhmatyuk's VAB Bank (read more in Andrey BLINOV's article "The End of the Refinancing Fairytale" in the current issue of ZN.UA), which have rocked the financial market this week, may be overshadowed by another piece of news. Creditors are also complaining of problems meeting financial obligations at Bakhmatyuk's core asset, Ukrlandfarming, an agricultural holding specializing in agricultural land cultivation and chicken egg production.
VAB Bank, which has been processing customer payment orders with significant delays since October 7, is one of the key creditors of its shareholder's group. According to ZN.UA, Ukrlandfarming borrowed $150 million from this financial institution. Repayment of this debt could be a significant boost for the bank, which has a total corporate loan portfolio of approximately $1,4 billion, of which approximately 25% (based on the bank's official reporting) are non-performing.
However, according to sources close to the bank, the debt has been restructured, and only interest payments are currently being made. Furthermore, the Ukrlandfarming Group has restructured a number of liabilities to other commercial banks in Ukraine.
According to Igor Petrashko, Deputy CEO of Ukrlandfarming, the group's total debt burden is distributed as follows:
— $500 million — UFL Eurobond;
— $200 million — Avangard Eurobond;
— about $200 million — a syndicate of Sberbank of Russia and Deutsche Bank (the initial size of the syndicate was $600 million, of which $500 million was selected and $300 million has already been paid out);
— about $150 million — a loan from VAB Bank;
— about $500 million — loans from other financial institutions (export-import agencies, Ukrainian banks).
"We currently have no disputes with our creditors. All loans are being serviced according to schedule. There are no legal disputes related to the loans," says Igor Petrashko.
However, data in the Unified Register of Court Decisions indicates that creditors do have legal claims against the company. Specifically, the collection agency "Credit Initiatives" has filed lawsuits to collect debt from PAO Kamennomostovskoye Grain Receiving Enterprise, OOO Yugtranzitservis-Agroprodukt, PAO Brailovskoye, OOO Tinkie, OOO Agrokompleks Nemirov LTD, OOO AF Zemlyanki, OOO Romny-Invest, and OOO Kristal.
According to information from the Unified Register of Court Decisions, a court decision has already been issued to recover debt from PJSC Brailivske (over UAH 44 million) and LLC Tinkie (over UAH 2,5 million). On July 31, 2014, the Commercial Court of Kherson Oblast issued a decision to seize the funds of Yugtransitservis-Agroprodukt LLC in connection with the satisfaction of the claim for recovery.
34 million UAH in debt.
Most of the above-mentioned enterprises belong to the so-called Valars holding (founded by Kirill Podolsky in 2006), whose assets Oleg Bakhmatyuk acquired through Ukrlandfarming. The group is engaged in the production and trade of grain. It owns approximately 230 hectares of land in Russia's black soil zone, warehouse complexes with a total capacity of
972 thousand tons, including three elevators in Russia, as well as a network of trade offices and two grain terminals in Taganrog and Azov.
In the fall of 2013, Ukrlandfarming acquired Podolsky's Ukrainian and Crimean assets. Along with the assets, Bakhmatyuk also acquired the company's debts of approximately $20 million (OTP, Credit Agricole). These loans are being serviced in accordance with the loan agreements (note: there are no disputes).
The aforementioned Deputy General Director of ULF, Igor Petrashko, claims that the debt for product deliveries from some of the companies purchased from Valars to entities that were not included in the deal (remained with the owner, Kirill Podolsky), and which have obligations to Alfa-Bank, was accumulated by the previous management in 2009–2012 through a series of fictitious transactions for the delivery of products to counterparties, which were financed using the bank's funds.
However, Mr. Petrashko himself admits that information about Podolsky's companies' debt to banks, including Alfa-Bank, was discussed during the transaction (meaning the company knew of the debt at the time of purchase, but now claims it was fictitious and therefore refuses to pay it). The sale of the Ukrainian portion of the assets was actively supported by the creditor banks.
"The proceeds from the sale of the Ukrainian portion of Valars, which we paid to the sellers, were supposed to be used, among other things, to pay off Valars's obligations to creditors. But this process was beyond our control. The debts owed by the companies we acquired amounted to approximately $20 million and are being serviced as normal (there are no claims against us). As for the entire Valars holding company, according to our information, Alfa-Bank, Sberbank of Russia, and Deutsche Bank have claims against Kirill Podolsky, the owner of the Russian business of this agricultural holding," says Petrashko.
After Ukrlandfarming acquired the company's assets, the debt was sold to a collection agency, which is currently engaged in litigation with ULF. "We filed counterclaims," says Petrashko, asserting that the company is servicing its loans on time. "We reached an agreement with our creditors to confirm the limits for our group," he asserts.
Moreover, according to ZN.UA, all of the group's assets are already pledged to major creditor banks—Sberbank of Russia and Deutsche Bank. The banks themselves have repeatedly approached the group's owner, Mr. Bakhmatyuk, with offers to find buyers for some of Ukrlandfarming's assets to repay the debt.
The need to repay loans is possibly one of the main reasons for the freezing of ULF's investment programs. Specifically, it was previously reported that Oleg Bakhmatyuk's Ukrlandfarming and Portinvest, the company that manages Rinat Akhmetov's SCM port business, intended to jointly implement a project at the port of Yuzhny. The plan was to build a multifunctional agricultural hub with a transshipment capacity of up to 10 million tons of grain and over 260 tons of vegetable oil per year.
But as Mr. Petrashko told journalists, construction is being delayed due to the company’s lack of financial resources.
"There is information that Mr. Bakhmatyuk received refinancing for VAB Bank in the amount of approximately UAH 2,5 billion from the National Bank under his personal guarantees. Furthermore, ULF assets were cross-pledged—some of them are simultaneously pledged to creditors and transferred to the National Bank," says a financier familiar with the situation at the holding.
According to him, the company's financial situation, upon closer inspection, could resemble a house of cards. And it could collapse if the company comes under serious pressure from creditors and the National Bank of Ukraine, which could very well impose a temporary administration on VAB.
Andrey Alekseev, ZN, UA
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