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Iurii
Contributor

The black times for Ukrainian agroholdings

The black times for the Ukrainian agroholdings

In August one of the biggest Ukrainian agroholdings "Mriya" had defaulted on the payments on its Eurobonds (issued in April, 2013) amounted to about $800 mln.
In the midoctober the Ukrainian subsidiary of the French bank "Credit Agricole" had succeeded in arresting the bank account of "Mriya". The reason was that Mriya had defaulted to repay its debt to bank that amounted to $27 mln.
At the same time group of the leasing companies admitted that the Mriya's debt to them is $60 mln. The problem was that Mriya was refusing to return to them the Ag machinery and vehicles it leased.
The total debt of Mriya to its creditors is about $1.3 billion while its market capitalization is only $190 mln. The biggest creditors of Mriya are:
• Ukrainian and foreign banks ($572 mln);
• Urainian and international investment companies ($472 mln);
• The International Finance Corporation, which is the part of the World bank group ($122 mln);
• The Europian export agencies ($109 mln).
The Mriya's creditors complain that at the same time the Mriya's founders and biggest shareholders (the Guta family) untransparently pump company's assets to another companies that belong to them among which are bank, logistic firm, big dealer center, grain business in Switzerland, property in Ukraine and abroad. At the same time Mriya since its IPO in 2008 on the Frankfurt stock exchange (Germany) did not pay any dividents. During this year the capitalization of Mriya company decreased by 71 percent.
The real problem is that this is a very bad signal to investors and creditors of the Ukrainian business in general. Ukraine now desparately needs investments and credits but it turns out that it is very risky to invest in Ukraine. This also means that the next year crop may be severely underfunded.
But Mriya is not the only one of the big Ukrainian agricultural holdings that is now falling down.
The IPO as the way to attract money last time had been made by the Ukrainian company in 2011. The "Industrial milk company" was the 13th and the last that IPOed.
Of that 13 companies there remained now only 9: went bust Landkom, Agrogeneration, MCB Agricole, Sintal. In the state of dying are Agroton and KSG Agro. And now collapses Mriya.
The Ukrainian Ag companies are turning off their investment plans for the next year.
The biggest producer of the sunflower oil - Kernel, - announced the significant decrease of the investments - about $50-$70 mln ($350 mln in 2013 and , $280 mln in 2012. The French company AgroGenerationthat now is part of the American company Harmelia decided not to invest at all in modernization. Its main goal is just to get the necessary working capital to plant the crop.
All Ukrainian agroholdings that are still in the lists of stock exchanges since the beginning of 2014 significally lost their market value: Agroton - by 90%, Astarta - by 70%, Avangard - by 57%, Industrial Milk Company - 50%, Kernel - by 30%, KSG Agro - by 90%, MHP S.A. - by 33%, Milkiland - by 85%, Ovostar - by 30%, Ukrproduct - by 38%.
And the main factors of this collapse of the Ukrainian agroholdings are not the Russian aggression towards Ukraine but the greediness of their founders and poor management. The Russian aggression only further aggravated their financial conditions.
This development was long ago predicted by the Ukrainian Ag experts.
Iurii Mykhailov
Ukraine






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5 Replies
Jim Meade / Iowa City
Senior Advisor

Re: The black times for Ukrainian agroholdings

What is the status of the $3 billion Chinese loan?  Has China gotten any of the corn it expected or has any of the loan been repayed?

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sw363535
Honored Advisor

Re: The black times for Ukrainian agroholdings

images.jpeg  I present to you the worlds most reliable source of grain and rock.  The good ole USA.

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Jameshh1964
Senior Contributor

Re: The black times for Ukrainian agroholdings

Ah heck SW, we haven't had a new State for a while; lets invite Ukraine into the Union and we'll make you Governor! Wouldn't you like to farm some of that topsoil that's 20 feet deep?
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sw363535
Honored Advisor

Re: The black times for Ukrainian agroholdings

what a mess that would be to clean up.......

 

No matter how good the soil or scenery,  nothing works with an accepted level of corruption.  

Russia is just one of the Ukraine's many problems.  

Odd that they encourage large investment in agriculture from outside their country while much of their agriculture work force goes outside the country to find work.

Ukrane is without a doubt one of the most potentially productive countries in eastern europe.

Jameshh1964
Senior Contributor

Re: The black times for Ukrainian agroholdings

I couldn't agree more. Sad situation.
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