Mriya is ready to sell part of its assets to satisfy creditors

Huta family found hidden assets

Photo: Konstantin Melnitsky

The scandal-driven Mriya Agro Holding has put up for sale part of its assets, according to the company’s statement on the investment portal Mergermarket, which specializes in M&A. «We... are optimizing the land bank. Part of the land will be put up for sale, for example, a 16,000 hectare plot in the Zhytomyr oblast,» General Director of the holding company Vladyslav Luhovskiy is quoted as saying in the statement.

Financial Director of Mriya Oleksandr Chernyavskiy told Capital that the work is currently under way to merge the assets of the company into a vertically integrated structure. «The issue of expediency of land farming in the Zhytomyr oblast is indeed relevant. Overall, there are plans to prepare 259,000 ha for the next farming season (the spring sowing campaign will begin in February-March — Capital),» says Chernyavskiy.

Money issues

Mriya Agro Holding founded in 1992 farms on over 300,000 ha of agricultural land in Western Ukraine. It specializes in the cultivation of wheat, barley, soybean, sugar beet, buckwheat, potatoes, etc. 20% of the company’s shares are traded on the Frankfurt Stock Exchange.

Financial problems of the holding began in the middle of 2014 and in August the company announced a technical default. Based on the assessments of the creditors’ committee that was formed, the company currently owes around US $1.3 bn to different creditors: Ukrainian and international banks, investment funds, leasing companies, etc.

In particular, the company fell into arrears on payment of US $129 mn on Eurobonds maturing before 2016 and appealed to creditors to restructure its debts. The talks between the two sides were protracted. The creditors are worried about the fact that the founders and major shareholders of Mriya — Ivan Huta, Klavdiya Huta, Andriy Huta and Mykola Huta — «are accumulating assets outside the company in a non-transparent way». There is a ruling passed down by the Romaniv Court (Zhytomyr oblast) in September in the Common Register of Court Rulings, which says that in 2013 Mriya created fictitious gross expenses to the tune of more than UAH 1 mn through the shell companies Ritolis, Romaniv-agro, Romaniv-agrokom, Saturn Agro and UPT, the founders of which are the group of companies Mriya Agro and Mriya Agro Holding LLC, which own the majority of the companies of the agro holding.

According to the information that Capital has, a compromise was found at the latest meeting held last Thursday, although the conditions of the approved road map of restructuring have not been announced as the document has been sent for approval abroad.
In 2013 Mriya registered net profits in the amount of US $88.5 mn, which is nearly two times less than in 2012. The EBITDA indicator fell by 11% to US $226.8 mn. In 2012, the holding increased its net profits by 16.2% compared with 2011 to US $174.29 mn.

Invisible assets

Analysts were surprised to learn that Mriya has assets in the Zhytomyr oblast. «According to the presentations of the company for investors, there has never been land in this area over all these years starting from 2008,» says Senior Analyst of Dragon Capital Tamara Levchenko. Analyst at Eavex Capital Ivan Dzvinka concedes that another business of the Huta family, which controls Mriya, was located in the Zhytomyr oblast. «Most likely, the land there was used by the company’s shareholders for their sugar business,» he claims. The expert says the price of the land plot offered for sale will depend on the productivity and availability of elevators and machinery.

«16,000 hectares is not a very large plot of land, which is why it could also be of interest for medium-sized companies. However, it is very difficult to finance even such comparatively small transactions these days. If a company has free resources, as a rule, they are used to cover operating costs,» adds Senior Analyst of the Art Capital investment company Andriy Patiota.

Dzvinka believes that the amount of the transaction is unlikely to exceed US $13 mn based on the assessment of US $300-800 per hectare. Experts say the land resources and warehouse capacities of Mriya are extremely attractive assets. It will be more difficult to find buyers of sugar plants and the potato business.