You're reading: Creditors demand payment from Mriya as prospect of bankruptcy looms for agriholding (UPDATE)

Editor’s Note: This is  article was updated to include a response the Kyiv Post received from Mriya Agro Holding on Oct. 15.

Mriya Agro Holding’s creditors appear to have
lost patience with how the giant farmer was handling nearly $800 million-$1
billion in debt restructuring, and have called on $534 million worth of
liabilities to be paid.

According to an Oct. 14 notice of
acceleration that Mriya published on the Irish Stock Exchange where its
eurobonds are listed, $472 million worth of bonds and $62 million of aggregate
principal and interest currently outstanding on bank loans are “immediately due
and payable.”

The notice means that the
Frankfurt-listed agricultural giant is in default and is being called on to
immediately pay back the money borrowed, the majority of which to bondholders,
said Alex Bart, managing director of Empire State Partners in Kyiv.

“This also may lead to bankruptcy
proceedings if (the creditors are) not paid back,” he added. 

In an emailed response to a Kyiv
Post inquiry, Mriya said that it “continues to work in accordance with the
standards and requirements put forth by public companies.” It said the notice of acceleration was issued on the Irish Stock Exchange “to ensure
transparency in the (debt) restructuring process for our creditors and all
interested parties.”

Mriya furthermore added that is conducting
business as usual by harvesting crops and preparing for the winter farming
season, all of which “ensures stable company activity in the long-term
perspective.”

One creditor has lamented that Mriya hasn’t
been forthright after it missed $32.6 million worth of interest payments
on two eurobonds on Aug. 1. It has $72 million outstanding on a $250 million
eurobond that matures in March 2016; and $400 outstanding on a eurobond that
matures in April 2018.

“To restructure you must have
trust, it’s a painful process,” said OTP Bank chief executive officer Tamas
Hak-Kovacs, whose subsidiary OTP Leasing loaned Mriya $23.36 million, of which
over Hr 39 million is outstanding through leasing agreements for agricultural
equipment. 

He added that “it appears they
(Mriya) are not ready to create trust; they are not ready to talk about the
past and show what happened,” referring to a forensic investigation that should
be conducted of its finances over the years that led to the credit default.
 

Kyiv-based Dragon Capital and New
York-based Blackstone Group International Partners were hired in August to
steer the company out of the crisis. Citing liquidity issues, by Aug.
13 Mriya had missed approximately $130 million in amortization and
interest payments.

Initially, the company, which
claims to manage 320,000 hectares of farmland, mostly in western Ukraine, said
the “group expects to continue its business operations in the normal
course.”

But on Sept. 19 Blackstone was
replaced by global auditor Deloitte “as (an) independent
consultant,” according to a notice to security holders by the farming
enterprise. By Sept. 23 time a bondholders’ committee had been formed, and a
data room made available to lending banks. To help with debt restructuring, Mriya
said it has since hired Swiss-based SGS Group, a company that conducts
inspection, verification, testing and certification, as well as Bryan Cave, a
business and litigation firm.

Eight foreign asset management
companies hold more than 50 percent of the outstanding principal amount of the
Ukrainian agricultural company’s $400 million 2018 eurobonds and approximately
15 percent of its $71 million 2016 notes.

They are Aberdeen Asset
Management, Ashmore, CarVal Investors, Greylock Capital, Fidelity, Pioneer
Investments, T. Rowe Price, and Vaquero Global Investment.

It was expected that the debt
would be restructured. Mriya’s total liabilities as of March 1 were
estimated at nearly $1 billion, according to a Sept. 25 note to investors by
Empire State Capital Partners.

Among its largest bank creditors
is the International Finance Corporation, the for-profit arm of the World Bank.
IFC gave three loans totaling $88 million to Mriya. Unicredit lent it $75
million and Credit Agricole $25 million.

Kyiv Post editor Mark Rachkevych can be reached at [email protected].