Fitch Ratings has downgraded Agroton's Long-term foreign and local currency Issuer Default Ratings (IDR) to 'C' from 'CCC' and National Long-term rating to 'C(ukr)' from 'BB-(ukr)', according a statement released by the agency.

"The agency has also downgraded Agroton's senior unsecured rating to 'C'/'RR4' in relation to its $50 million Eurobond due in July 2014. All ratings are removed from Rating Watch Negative (RWN)," reads the statement.

The downgrade reflects the company's announcement that it is unable to make the payment of its $3 million coupon due on July 14, 2013 due to its inability to access its cash and that it has asked bond-holders to consider a proposal to restructure the terms of the $50 million Eurobond.

The proposed terms of the restructuring include reducing the coupon from the current 12.5% to 8.0% and extending its maturity from July 2014 to January 2019. Given that the revised terms would result in the imposition to bond-holders of a material reduction in terms vis-a-vis the original contractual terms and the restructuring is being conducted to avoid bankruptcy, Fitch would consider it as a Distressed Debt Exchange (DDE).

The company's main bank account, where its cash is lodged, is with Bank of Cyprus which itself is currently undergoing a restructuring. This is affecting Agroton's liquidity position.

Additionally, the company reported that its operating performance is likely to further deteriorate in 2013, driven by adverse weather conditions in Luhansk region, which negatively affected crop yields and a drop in the prices of its crops - wheat and sunflower.

As reported, Agroton floated 5.67 million shares (26.2% of the authorized capital) via an IPO raising about $56 million in October 2010. The company also sold a debut $50 million 3-year 12.5% Eurobond in July 2011.


 

Ukrinform