Over the last few weeks we made critical observations regarding financing of Ukrfarmland, the other entity owned by Oleh Bakhmatiuk.  Now that Avangard has finally announced that the $400 plus million raised through an IPO and Eurobond placement last year will be going to almost double Avangard egg production, we are less critical.  Mr. Bakhmatiuk’s announcement that "Currently we're realizing two projects of three million hens each, and their total value could reach $500 million," Oleh Bakhmatiuk, the holding's board chairman, has told Interfax at the sidelines of a forum organized by Russia's Troika Dialog in Moscow.  Apart from production facilities, the complex would have a sorting plant, a slaughter workshop, a bio-gas plant and other facilities, he said.

Bakhmatiuk said that the first facility would be launched in the third quarter of 2011. The project is to be finished in 2012. The project will allow the holding to boost egg output from 4.4 billion eggs in 2010 to almost seven billion eggs in 2012. 

Now that we know that Avangard’s money is going to Avangard, we surmise that Bakhmatiuk’s close alliance with Troika Dialogue, who is being acquired by Sberbank, explains where the money is coming from for Ukrfarmland.  Our guess that is that part or all of Mr. Bakhmatiuk’s 75% stake in Avangard is the collateral for the new loans.  The question is whether he will be able to pull off an Avangard II based on the heavily indebted RIZE and DAKOR acquisition.  If not Avangard I may have a new majority owner.

UkrAgroConsult