Corporate raids and forced bankruptcy—Yuri Kirilov's track record astounds even the most seasoned expert. He proudly calls himself an investor and has an uncanny knack for identifying promising businesses. Equally astonishing is the speed with which his favored companies "go under." It appears this fate could befall Dashukovsky Betonity, located in the Cherkasy region, in the near future.
The recognizable signature of an "investor"
Mr. Kirilov's first "track record of interests" was the company "Lugansk Batteries." For many years, it was the only developer of alkaline batteries and batteries in Ukraine, as well as the technologies, equipment, and facilities for their production. In 1998, the company was reorganized into an LLC, and in late 1999, the winner of the tender for the management of state corporate rights was "Firm Trading House, JSC." By that time, the company was already on the verge of bankruptcy. The aforementioned firm, with the active "support" of the then Luhansk Regional Administration, developed a "Recovery Plan for OJSC "Lugansk Batteries." The next "logical step" was rehabilitation.
The company had been unprofitable since 2009, when its net income began to decline. Losses at the Luhansk-based research and production enterprise amounted to UAH 823 in 2009, UAH 721 in 2010, and UAH 233 in 2011. Its main owner, Yuriy Kirilov's Astron-Ukraine Group, sought bankruptcy to escape its debts to Nadra Bank. Numerous lawsuits, proceedings, and collection actions resulted in bankruptcy. Bankruptcy proceedings against Luhansk Accumulators CJSC were initiated in October 2010 at the debtor's own initiative. The company's latest reorganization began at the same time. To be fair, it should be noted that Nadra was never granted the status of primary creditor: the courts recognized that Lugansk Batteries owed property, rather than financial, obligations to the bank. In practice, this meant that the plant's assets remained pledged to the bank, and Mr. Kirilov's companies retained control over the debtor's creditors' committee.
Another jewel in Astron-Ukraine's crown that never quite became a diamond was Gazotron Lux. It was conceived as Ukraine's first enterprise to produce compact fluorescent lamps, founded in 2006. The project was financed by Nadra Bank, again in the amount of €1,861,911.30, with a maturity date of 31 December 2015, and an interest rate of 14,5% per annum. The bank also provided the borrower with a loan of €10,550,830.70 for the purchase of equipment and components for fluorescent lamp production. Gazotron Lux used this money to purchase equipment from the German company High-Lux Lichttechnik & Co. Vertriebs. Initially, the idea was sound: the Rivne lamps were to be of European quality, but affordable in a Ukrainian way. An excellent resource for displacing Chinese manufacturers who are aggressively filling the Ukrainian market.
The plant was originally planned to operate three shifts and produce 6 million bulbs per year under the Lummax brand. The plant planned to export approximately 25% of this volume, but a flood of more attractive offers from Ukrainian and foreign companies dashed these hopes. By 2008, Gazotron Lux had managed to organize lamp production on only one shift, which operated at only 60-70% of capacity. The saga came to a head in 2008, when first the plant, and then Nadra Bank itself, began to founder. Gazotron Lux never reached its design capacity due to a lack of planned funding and, consequently, a lack of sufficient revenue. In 2011, the plant completely halted production, and approximately 100 employees were laid off. Bankruptcy and liquidation followed. Just the way an "investor" likes it.
The Lutsk Cardboard and Roofing Felt Plant, which also falls under Astron-Ukraine's purview, has suffered a similar fate. Commissioned back in 1973, the plant long led the production of roofing, boxboard, and bookbinding cardboard. Its products enjoyed steady demand both in the Ukrainian market and among international consumers. But in 2006, Yuriy Kirilov and Astron-Ukraine arrived at the plant. Following a "new policy," the plant pledged assets belonging to the State Property Fund to Prominvestbank. This dubious move cost the plant a lawsuit for providing false documents. The litigation ended in 2009, the court returned the assets to the local branch of the State Property Fund, and the plant fell into a downward spiral. That same year, the plant's workers went on strike over unpaid wages. The total amount of claims is over 850,000 hryvnias. In 2012, the plant's situation worsened: its revenue amounted to 127,000,000 hryvnias, while it incurred a loss of 6,7 million hryvnias.
The future is predictable: by a ruling of the Volyn Regional Commercial Court on April 2, 2014, the Lutsk Cardboard and Paper Mill was declared bankrupt. Despite the mill being liquidated, a cardboard and paper mill still operates on its premises, currently employing approximately 200 people. Investors, then, are considering investing.
Finally, the last and most recent project: Dashukovsky Bentonites OJSC. The company was established in March 2000 to market the products of Dashukovsky Bentonites OJSC (formerly the Dashukovsky Bentonite Clay Plant). The plant (the main production line for bentonite powders) was built in 1980 and develops the Dashukovsky section (quarry) of the Cherkasy bentonite clay deposit, the largest in Ukraine. This unique deposit contains 90% of all Ukrainian clay deposits ready for industrial use. The plant's industrial capacity is 220,000 tons of finished bentonite products per year. They are used in the oil and gas production, mechanical engineering, metallurgy, and civil construction industries.
In the late 90s, a controlling stake in the plant fell into the hands of the Trading Company. Yuriy Kirilov was elected to the supervisory board of Dashukovsky Bentonites. "Thanks" to his leadership, the plant began a steady downward spiral toward bankruptcy in 2011. It ended 2014 with losses exceeding 20 million hryvnias, and today the company is in arrears in wages for several months. Incidentally, this figure has been reduced by almost half, from 400 to 250 hryvnias. And the outstanding balance with VTB Bank, where the loan was taken out, stands at 67800000 million hryvnias as of July 10, 2015.
Honored "selector"
Yuriy Kirilov is the Chairman of the Board of Astron-Ukraine Corporation. It is an investment and industrial holding company with a centralized management structure, coordinating and supporting the activities of industry-specific and regional companies with their own brands. The company implements investment projects in the industrial, processing, and energy sectors of the economy. This is the official part of its corporate biography. The unofficial part is evident from the previously described fates of quite viable enterprises within Astron-Ukraine's sphere of interest. The facts are more than eloquent, as are the indicators.
And finally, an interesting detail: the "Luhansk Battery," mentioned above, is currently in the hands of separatists from the LPR, who are using the plant's unique equipment to repair tanks and cannons—the very same ones that kill our soldiers. Meanwhile, the owner of the company's property rights, Luhansk-born Yuri Kirilov, could well have moved all the equipment to other facilities, given the events in Crimea. Or are the invaders using his company's facilities with his "blessing"? Law enforcement agencies must answer these, and many other questions related to Mr. Kirilov's "investment" activities.
Oleg Boyko
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