Avangardco warned of a potential legal challenge to plans to
seize "illegally" Crimea's largest poultry farm, the latest of a series of setbacks
to its operations from the Ukraine crisis.
The Kiev-based egg producer, controlled by agriculture and
gas billionaire Oleg Bakhmatyuk, said that it "welcomes an open discussion"
over the future of its Yuznaya Holding farm, after Crimea's Russian-backed
government proposed the compulsory purchase of the site.
However, the group, which is listed in London, also flagged
its right to defend in national and international courts "any illegal claim on
Mr Bakhmatyuk, who in 2011 brought Avangard under the wing of
his Ukrlandfarming agribusiness giant, has separately urged Crimean authorities
to reconsider their intention to "illegally seize private assets and start an
open dialogue with the management regarding future business plans of Avangardco
poultry farm on the Crimea peninsula".
Ukraine crisis setbacks
The disputed assets represents only a small part of the
Avangard empire, comprising some 3% of capacity as measured by layer hens, which
as of the end of June numbered 22.8m group-wide.
Indeed, the group wound down operations in Crimea, where it
also owns a breeder farm, after the occupation of the region by pro-Russian
However, the threatened compulsory purchase represents a
further toll on the group from the Ukraine crisis, which has also seen the
occupation of a feed mill by pro-separatist militia in the east of the country,
where Avangardco has also reduced operations at poultry farms in Donetsk and
These represent larger operations, responsible for 22% of group
laying hens as of the end of 2013, and 19% of group revenues last year.
Indeed, Fitch Ratings on Monday said that "the political
uncertainty in Ukraine, including Avangardco's exposure to eastern Ukraine
regions… may ultimately threaten the group's financial flexibility and its
ability to meet its debt obligations".
However, Fitch, noting also the group's "low leverage",
restated the group's rating of CCC, the same as the Ukraine sovereign rating.
The rating agency added that it consider as "critical for
further development and improvement of the company's business risk" Avangardco
expansion into export markets, which accounts for 29% of revenues last year.