Mriya initiates review of financial position, possible debt restructuring

Farming group Mriya Agro Holding (MRIYA, MAYA GF) announced on Aug. 1 that its finances have deteriorated and liquidity has worsened, citing rising prices for certain raw materials, decreases in agricultural commodity prices and a lack of access to working capital funding. As a result, the group hasn’t been able to make interest and principal payments on some of its debt obligations and is involved in restructuring talks with relevant lenders. The company stated it has initiated a review of its business and financial position, which may result in a “restructuring of the Group’s balance sheet.” So far, the holding revealed no details on its possible restructuring and its officials have not been accessible.



Roman Topolyuk: We believe Mriya defaulted on its conventional banking loans, since the coupons on its 2016 and 2018 Eurobonds are payable in March/September and April/October. The company is supposed to repay USD 217 mln to its lenders in 2Q14-4Q14, according to its annual report for 2013. The middle of a calendar year is not the best time for a farming company to repay any loan, given that in this period farmers seasonally hike their investment into their future harvest. Our understanding is that Mriya was counting on some refinancing to cover the payments but failed to find any due to increased political uncertainty in Ukraine. This situation was aggravated by plunging prices for farming commodity futures. Specifically, since early May, the September 2014 futures contract for corn has dropped 28% to USD 139/t and wheat has fallen 30% to USD 197/t.



Possible forthcoming negotiations with lenders on the defaulted debt may result in new restructuring offers for the holders of Mriya’s Eurobonds, who have up to 63% of Mriya’s total debt, which stood at USD 743 mln as of March 2014. Failure to pay on time any debt in excess of USD 10 mln leads to a cross-default on the notes, according to the prospectus of Mriya’s 2018 Eurobond. If so, the holders of Eurobonds have a right to demand their early repayment (provided not less than 1/5 of holders request it) and the issuer has to satisfy their demands. It’s clearly not the best time to demand early redemption of all of Mriya’s Eurobonds, so we do not expect bond holders will use this opportunity.

Источник: Конкорд Капитал