State and NABU pressure on Bakhmatyuk will lead to worst case scenario - Concorde Capital

Concorde Capital reports that being incapable of pressuring the really "big fish" like the former shareholders of Privatbank, the state has concentrated its efforts on prosecuting Bakhmatyuk and Kostyantyn Zhevago.

While the pressure on Zhevago does not look very harmful for his key business Ferrexpo attacks on Bakhmatyuk could be disastrous for his farming business.

Experts of Concorde Capital consider that it is very probable that Bakhmatyuk and his alleged partners at the National Bank, all of whom are suspected in conspiracy, will be able to prove in court the lack of grounds in the allegations of the National Anti-Corruption Bureau (NABU). However, this does not guarantee that state pressure on Bakhmatyuk will stop.

Bakhmatyuk revealed a possible debt resolution plan that he claimed to be actively discussing with government authorities. Commenting this last week, Bakhmatyuk said he was close to reaching a deal in which he would pay up to UAH 8.5 bln to the State Deposit Guarantee Fund during eight years. If fulfilled, the plan would have paved the way for Bakhmatyuk to continue debt restructuring talks with international creditors, perhaps on even better conditions than had been offered last winter.

At the same time, a possible debt deal with the state entities looks too good to be true. Taking this into account, as well as the recent NABU pressure, we see the worst-case scenario as being more probable now. This scenario assumes continuing government pressure on Bakhmatyuk and his loss of control over Ukrlandfarming, which will likely result in this business falling apart. This assumes little recovery of any of Bakhmatyuk's debt, particularly the claims of international creditors and state entities.