Ukrainian oligarch Bakhmatyuk urgently needed money to cover his debts
Kyiv, November 01 (Navigator, Vladimir Mikhailov) – The largest agricultural holding in Ukraine, UkrLandFarming, intends to raise about 250 million dollars by selling 4-6% of shares to foreign investors. As the owner of the company, Oleg Bakhmatyuk, said in a recent interview, the company posted an advertisement for the sale of shares on Bloomberg and carried out a mailing to funds. About 50 companies responded to the announcement of the sale of shares. UkrLandFarming is currently accepting their applications.
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In the summer, the company postponed the previously planned sale of 20-25% of shares on the London and Hong Kong stock exchanges due to the political crisis in Ukraine. Then Oleg Bakhmatyuk said that the company could return to the issue of an IPO at the end of 2015 if the situation in Ukraine stabilizes in 2014. It is known that the agricultural holding has problems with its enterprises in the South-East of Ukraine and Crimea.
In early October, Standard & Poor's Credit Rating Service downgraded UkrLandFarming's long-term credit rating from B- to CCC. The deterioration of the rating is due, in particular, to the high risk of default in Ukraine. The company will experience a liquidity shortage when repaying debt obligations equally in the event of a sovereign default, according to S&P.
In a statement, S&P indicated that UkrLandFarming does not have sufficient local currency liquidity to repay foreign currency debt and local currency debt obligations (including a cross-default provision), which could be accelerated by a sovereign default and the effect of currency conversion restrictions. The company's exposure to country risks is assessed as high due to the linking of UkrLandFarming's assets to Ukraine.
More than 90% of the company's debt is denominated in US dollars and euros, and revenue generated overseas accounts for less than half of the company's revenue. Therefore, UkrLandFarming is exposed to significant currency risk, according to S&P.
According to PolitNavigator's market source, the sale of part of the shares is due to the urgent need to raise funds to cover existing debts. “Bakhmatyuk’s business is a kind of pyramid,” a source told an agency correspondent on condition of anonymity.
UkrLandFarming is the largest agricultural holding in Ukraine. The company specializes in the production of grain, sugar and beef. The company's land bank contains 653 thousand hectares of land. The main owner and head of the company is Oleg Bakhmatyuk.
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