Ukraine’s Avangardco May Seek to Extend Bonds as War Hits Sales

  • Egg producer looking at options for $200 million October notes
  • Company has suffered ‘catastrophic market loss,' parent says

Avangardco Investments Public Ltd., controlled by Ukrainian “Egg King” Oleg Bakhmatyuk, may seek to lengthen maturities on $200 million of bonds after a sales plunge caused by war and collapsing domestic demand.

An extension for the 10 percent securities due on Oct. 29 is an “option” being discussed with advisers, Ihor Petrashko, deputy chief executive officer of London-listed Avangardco’s parent UkrLandFarming Plc, said by phone from Kiev, Ukraine on Thursday. The bonds sold in 2010 traded at 50 cents on the dollar on Friday, down from 101 cents in July, according to Trace, the Financial Industry Regulatory Authority’s bond-price reporting system.

The company “doesn’t have the means to pay” the notes, Petrashko said. “Refinancing the bonds would be the best option, but it’s unlikely in the current situation.”

The egg producer’s first-quarter sales tumbled 52 percent to $72 million as conflict disrupted output and caused more Ukrainians to keep chickens at home rather than relying on purchases, Petrashko said. UkrLandFarming, the nation’s largest agricultural producer, is also trying to renegotiate loans as the country suffers its worst recession since 2009.

Avangardco has had “a catastrophic market loss in Ukraine,” Petrashko said. The Kiev-based company’s egg production plunged 44 percent from a year earlier to 1.05 billion in the three months ended March. It has lost access to facilities in Russian-annexed Crimea and in war-hit eastern regions.

The company’s global depositary receipts fell 2.3% to $1.52 in London on Friday. They’ve plunged 83% in a year.

UkrLandFarming Loans

UkrLandFarming is in discussions with Deutsche Bank AG and OAO Sberbank about a $600 million loan maturing in 2016, Petrashko said. The company, which owes about $200 million on the facility, won’t be able to make payments this year, Petrashko said.

“We are exchanging proposals and hope to reach a decision soon,” he said.

Talks are also under way with Raiffeisen Bank International AG about extending a principal loan payment due in September.

UkrLandFarming’s $500 million 10.875 percent bond due 2018 last traded at 49.5 cents on the dollar in May, down from 93.5 cents in July, according to Trace.

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