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Ekotechnika unveils losses, as stockmarket flotation looms

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Ekotechnika revealed a further year of losses, albeit smaller ones, as it heralded the last, and "difficult phase", of a restructuring which has seen it dodge an insolvency claim and will end in a stockmarket listing.

The German-based group - the holding company for EkoNiva-Technika group, Russia's largest dealer in foreign-branded agricultural machinery, notably Deere products – revealed a net loss of E25m for the year to the end of September.

The loss, which compared with a E27m loss the year before, was largely down to a E16m exchange rate hit stemming from the slump in the rouble.

"The substantial decline in the rouble-euro exchange rate continues to play a role," Ekotechnika said.

However, revenues also dropped by 34% to E110m, undermined by "the continuing challenging situation in the Russian farming equipment market, as well as the massive rise in local financing costs", Ekotechnika said.

Overall Russian tractor sales in the first nine months of the year fell by 41% to 29,245 vehicles, according to data from industry group Rosagromasch.

Combine sales, at 4,244 units, were 9.7% down.

Financing squeeze

Stefan Durr, the German-born, but Russian-based, agricultural entrepreneur, and the Ekotechnika chief executive, underlined the difficulties presented by tight Russian credit conditions, a reflection of the country's economic malaise and depreciated currency.

"The economic situation in Russia means that trading conditions for the distribution of international farming equipment remain challenging," he said.

"The potential for high-quality international farming equipment in Russia remains high, but local farmers obviously need access to financing at sensible terms in order for this potential to be realised."

Debt-for-equity swap

However, Mr Durr added that Ekotechnika had, despite its losses in the latest year, performed ahead of target, boosted by a strong performance in spare parts – an operation which is often strong for machinery groups when poor financial conditions prompt farmers to stock with old machinery rather than buy new.

The comments came as the group unveiled details of a "difficult phase" of its restructuring process, in which it has been engaged for most of the year", and has involved the fending off last month in court an attempt to open insolvency proceedings.

The latest stage of the restructuring involves a debt-for-equity swap, with holders of E1,000 of bonds to receive either 25.65 class A Ekotechnika shares, with priority rights, or a cash sum which will be determined by a flotation process next month.

The company is scheduled to list in Dusseldorf on December 17.

The amount received by bondholders seeking to cash out "will depend on the price at which the unsubscribed shares will eventually be sold".


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