The operator of agricultural farms, present in Kharkiv, is betting on his survival by getting rid of “toxic” assets damaged, destroyed or made inaccessible because of the war in Ukraine.
Get rid of the burden of assets that have become “toxic” following the invasion of Ukraine by Russia in February. This is the goal of AgroGeneration, a grain and oilseed producer based in the Kharkiv region in northeastern Ukraine. ” Around 25,000 hectares of the group’s farmland, related fixed assets and production infrastructure are considered ‘toxic’ because their value has fallen sharply, says the farm operator in its press release. At best, these assets, agricultural machinery, inventory, land assets or real estate, have been damaged due to military activity. At worst, they were destroyed.
Four out of six sites
It is also land located near front lines without having access to them and unable to use these assets (including extensive mining) [et] assets for which the company incurs expenses or increases its debts but [qu’elle] no longer able to use them », Details AgroGeneration, adding that « four of the six production sites currently have such ‘toxic’ assets with varying amounts of losses. The maintenance (including rental) and repair costs are colossal, estimated at more than 50 million dollars (51.5 million euros). “ The existence of such ‘toxic’ assets in the group’s balance sheet, in addition to high costs, creates a number of other disadvantages, including challenges in auditing these assets, which leads to serious difficulties in carrying out to carry out the complete audit of the company says AgroGeneration. The following is self-evident: the “toxic” assets, recorded in the balance sheets of the Podolivska and Barvinkivska farms, have been transferred to two companies ad hoc, Barvinkivska Agro and Podolivska Agro, with all related obligations and commitments. A liquidator has been appointed. He will have nine months, until June 2023, to carry out his mission. ” Liabilities and costs [représentent environ] $1.1 million to be paid to the liquidator (in monthly installments) in equal amounts for the execution of the liquidation », says AgroGeneration.
For the company, such a restructuring was a matter of survival. She had no other choice, even if her exploitable agricultural land is now limited to 30,000 hectares. The financial results will obviously bear the scars of the war and the liquidation, and the management does not see any improvement before the end of 2023. On the stock market, the title, already sacrificed, continues its descent into hell: this Monday, it falls by 15%, to 8 cents.
PC