According to the official statement made by the company yesterday, Tuesday, July 16th, Agroton will not be able to pay a coupon on UAD 50 million bonds due to its fund being frozen in a Bank of Cyprus. Company stated that it will try to “amend the terms of the bond”. Stock market reacted immediately with company’s market capitalization and share price falling 36%. Under international bailout conditions in March, Cyprus froze deposits of more than 100,000 euros at the Bank of Cyprus. Agroton stated that that approximately USD 1.9 million remained frozen Company did not release the due date of the payment, however it is known that the payment was made on July 16th. Sales revenues of the company were not enough to supplement 12.5 percent coupon payment.

Company suffered an 8 times capitalization and share price decrease in a period from April 11 2013 to April 13 2013 due to the same reason of Bank of Cyprus freezing company’s funds.

UkrAgroConsult comment: Cyprus low tax regime had been the main reason for CIS region countries allocating funds in Cyprus. Due to Cyprus being an off-shore zone, investors are usually skeptical towards companies that operate in these zones. Agroton situation is a flag for foreign investors as they will become even more cautious working with Ukrainian Agro Holdings. 

You may receive full version of the report by following the link.

In order to view sample Weekly UAIndex report, please follow the link.

UkrAgroConsult