Mriya takes slow steps to re­cov­ery


If suc­cess­ful, Mriya’s case might serve as an ex­am­ple of how skill­ful man­age­ment can bring a com­pany through tech­ni­cal de­fault de­spite tur­moil in Ukraine’s econ­omy.

Ternopil-based Mriya Agro Hold­ing is now on the path to re­pay its $1.1 bil­lion in debts to for­eign cred­i­tors af­ter reach­ing an agree­ment with them. The agro­hold­ing is in­creas­ing land pro­duc­tiv­ity, buy­ing new equip­ment, and adopt­ing tech­nol­ogy so­lu­tions to re­cover.

How­ever, the com­pany re­mains at risk of raider at­tacks from its former own­ers, the Huta fam­ily, sus­pected of em­bez­zle­ment of for­eign loans.

Still in debt

Si­mon Ch­er­ni­avsky, the CEO of Mriya, took over in Fe­bru­ary 2015, shortly af­ter Mriya de­faulted and its former own­ers fled the coun­try.

Founded in 1992, Mriya went pub­lic on the Frank­furt Stock Ex­change in 2008. In n Au­gust 2014, the pre­vi­ous own­ers rs of the com­pany that con­trols 177,000 77,000 hectares of land in western es­tern Ukraine, the Huta fam­ily, ily, failed to re­pay cred­i­tors. The ex-own­ers left the com­pany pany in tech­ni­cal de­fault. They hey are sus­pected of al­legedly dly trans­fer­ring the money y to off­shore firms ms in Cyprus, which be­came known nown af­ter the leak of the Panama nama Pa­pers. An ar­rest war­rent rrent for Mykola ykola Huta, the former CEO, has been is­sued ed by In­ter­pol.

Since then, Ch­er­ni­avsky's ky's new team, ap­pointed ointed by Mriya’s cred­i­tors and bond­hold­ers, b have been try­ing to p pre­serve the com­pany, tak­ing back land from the pre­vi­ous own­ers through the courts, re­struc­tur­ing and pay­ing debts, and restor­ing the hold­ing's im­age. As one of the sign signs of re­cov­ery, Mriya was ac­cepted ac back to the Amer­i­can Amer­ica Cham­ber of Com­merce in Ukraine in Septem­ber. Septembe “It’s a pos­i­tive po story that doesn’t doesn have an end­ing,” Ch­er­ni­avsky C said. The com­pany has to fin­ish debt re­struc­tur­ing re­structu and re­turn money to cred­i­tors, cred­i­tor he said. In May, M Mriya agreed to re­struc­ture debts with the In­ter­na­tional In F inance in Cor­po­ra­tion. Cor­por They split the debt into se­cured and unse- cured parts. Ch­er­ni­avsky said the re­struc­tur­ing should be fin­ished by May.

IFC re­gional man­ager Ja­son Pell­mar con­firmed that the IFC agreed on re­struc­tur­ing prin­ci­ples de­vel­oped by Mriya and its cred­i­tors.

“The new com­pany’s man­age­ment has been fo­cused on re­viv­ing the com­pany and en­sur­ing that it con­tin­ues to op­er­ate,” Pell­mar said in an email.

Tech­nol­ogy so­lu­tions

When the ex-own­ers left the com­pany al­most in de­fault, Mriya was deep in debt and lost some of its land and machin­ery.

Ch­er­ni­avsky was shocked to see the con­di­tions in 2015. “I re­mem­ber be­ing ab­so­lutely as­ton­ished with the de­gree of fraud that was go­ing on,” he said.

To re­cover, the hold­ing started pur­chas­ing new equip­ment to re­place stolen items. The com­pany said the Huta fam­ily took about 1,100 units of equip­ment. The com­pany spent $25 mil­lion on new machin­ery and plans to meet the short­age by 2020, ac­cord­ing to Mriya chief oper­at­ing of­fi­cer An­driy Hry­horov.

Apart from that, the com­pany im­proved the con­trol­ling GPS sys­tem on machin­ery to min­i­mize theft and op­ti­mize ef­fi­ciency, Ch­er­ni­avsky said. The trucks are equipped with the fuel sen­sors that mon­i­tors con­sump­tion and un­sanc­tioned stops. On a field, the agron­o­mists use tablets to get the data they need in farm­ing.

The GPS sys­tem was in­tro­duced by the Huta fam­ily, al­though they did not use the data ef­fi­ciently, Ch­er­ni­avsky said.

“It was all com­pletely su­per­fi­cial,” he added.

Still at risk

Con­cen­trated on re­cov­ery, Mriya re­mains at risk of raiders at­tacks from the pre­vi­ous own­ers.

Alexander Paraschiy, head of re­search at Con­corde Cap­i­tal, said the threat puts the com­pany’s re­cov­ery in dan­ger. “Of course, its fi­nan- cials are get­ting bet­ter, its EBITDA (earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion, and amor­ti­za­tion) is in­creas­ing and so is its abil­ity to cul­ti­vate more land,” Paraschiy said.

“But the key risk for its op­er­a­tions is a pos­si­ble con­tin­u­a­tion of at­tacks from former share­hold­ers who have good con­nec­tions to power bro­kers in Ternopil re­gions, the core re­gion of Mriya’s op­er­a­tion.”

In April, Mriya re­gained con­trol over 10 com­pa­nies with 5,000 hectares of land through the court from the pre­vi­ous own­ers. Ch­er­ni­avsky ex­pects to re­turn sev­eral more hectares.

“But ob­vi­ously the more time goes by, less likely those leases will still be valid,” he said.

Ac­cord­ing to the open reg­is­ter of pri­vate com­pa­nies, Ivan Huta, a former owner, founded another agri­cul­tural com­pany in De­cem­ber 2015. The firm, based in Ternopil Oblast, spe­cial­izes in crop pro­duc­tion.

“I think it’s pa­thetic that he is al­lowed to con­tinue to farm,” Ch­er­ni­avsky said.

Kyiv Post couldn’t reach Ivan Huta for com­ment.

Fu­ture po­ten­tial

Af­ter debt re­struc­tur­ing, the com­pany might be ready for sale. Ch­er­ni­avsky es­ti­mates Mriya’s as­sets at $150 mil­lion, with po­ten­tial growth to $250$350 mil­lion.

Paraschiy said it’s too early to dis­cuss a po­ten­tial sale as it won’t hap­pen in the next five years.

As Mriya re­cov­ers and im­proves its im­age, Ch­er­ni­avsky sees chal­lenges ahead in find­ing for­eign in­vest­ment. He said that the ab­sence of the rule of law and lack of pri­va­ti­za­tion of state-owned en­ter­prises pre­vent new in­vestors from com­ing.

“Un­for­tu­nately, I think Ukraine is be­hind the curve in terms of get­ting re­sults and achiev­ing the mile­stones, even the KPI (key per­for­mance in­di­ca­tors) the president (Petro Poroshenko) put in front of him­self one-two years ago,” he said.

A stork flies over a grain field of Mriya agro­hold­ing, based in Ternopil Oblast, on July 31. (Cour­tesy of Mriya)

Si­mon Ch­er­ni­avsky, the CEO of Mriya.

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