Rusagro may invest in a competitor

Vadim Moshkovich's Rusagro agricultural holding is ready to become a co-owner of the Razgulay group. The ex-senator is interested in a competitor's sugar business. But the deal may be complicated by shareholder disputes: VEB, as a creditor and co-owner of Razgulay, insists on an additional share issue, which the majority shareholder, Avangard Asset Management, opposes.

Vadim Moshkovich is asking the price of a competing agricultural holding in the Black Earth Region
Photo: Dmitry Dukhanin, Kommersant

Rusagro, owned by ex-senator from the Belgorod region Vadim Moshkovich, may become a strategic partner of the Razgulay group, Interfax reported yesterday, citing its sources in both companies. Rusagro declined to comment. Razgulay told Kommersant that in the near future managers of Rusagro may join the group’s board of directors. According to a representative of Razgulay, this initiative is planned to be announced on September 2 to the group’s board of directors; a final decision on the issue could be made as early as September 11 at an extraordinary meeting of shareholders. However, as follows from the meeting agenda published on the Razgulay website, it is planned to discuss the issue of an additional share issue of 9 billion rubles. But it is the possible additional issue that may complicate the announced partnership with Rusagro, since not all Razgulay shareholders support this procedure.

From the materials of Razgulay it follows that it is planned to place 3 billion shares (currently the company’s authorized capital is 570 million rubles, the share of the additional issue in the increased authorized capital will be 94%). It was previously reported that VEB, one of the largest shareholders of Razgulay, where the state bank owns about 20%, is insisting on an additional share issue. VEB wants to use the funds received from the additional issue to reduce the company's debt burden. “Razgulyay owes the state bank about 40 billion rubles, the additional issue will allow VEB to convert the group’s debt into shares, becoming its main owner,” claims a Kommersant source close to Razgulay. This scheme is unprofitable for other shareholders of the agricultural holding - Rustem Mirgalimov’s Avangard Asset Management (owns 29.9% of Razgulay) and the fund managed by Altima (8.18%), since their stakes will be washed away, Kommersant’s interlocutor continues. It was not possible to contact them yesterday. A Kommersant source claims that until Razgulay’s shareholders resolve the issue of restructuring the debt to VEB, no changes will occur in the board of directors.

The Razgulay group produces sugar, grain and milk. The holding controls more than 340 thousand hectares of land. In 2014, revenue decreased by 6%, to 14.2 billion rubles. EBITDA amounted to RUB 2 billion. EBITDA margin increased to 14% from 7%.

Now there are two most likely scenarios for the development of events: the bankruptcy of Razgulay, which is unprofitable for VEB, or a sale to a strategic investor, another Kommersant source close to the agricultural holding tells. VEB declined to comment officially. Kommersant's source in the state bank says that there is still no final decision on the fate of Razgulay. “Various scenarios are being considered, including the sale of a share and the conversion of debt into capital,” noted Kommersant’s interlocutor, refusing to specify the share that VEB is claiming. He confirmed that Rusagro is considered as a strategic investor in Razgulay. Another Kommersant interlocutor notes that Rusagro is only interested in the sugar division of Razgulay. “Rusagro is now trying to understand the current situation in Razgulay, to whose board of directors Mr. Moshkovich is trying to delegate his representatives,” he added.

Earlier, the head of VEB, Vladimir Dmitriev, stated that the state bank was ready to assign to Sberbank the rights of claim to Razgulay. VEB was ready to sell the Razgulya stake at the market price of 14 billion rubles. Sberbank, which acted in the interests of Rusagro, but the deal fell through, says one of Kommersant’s sources.

Vadim Moshkovich, the main shareholder of Rusagro, has the funds to purchase new assets in agribusiness. In July, the ex-senator concluded a deal to sell his development business (including the Avgur Estate company and 2.4 thousand hectares in the village of Kommunarka on the territory of New Moscow) to the BIN group of the Shishkhanov-Gutseriev family. Experts estimate the cost of this transaction at $1.5–2 billion.

Anna Zibrova, Elena Kiseleva

Vadim Moshkovich will go wild