SALIC overpaid for Mriya Agroholding

Saudi Agricultural and Livestock Investment Co. (SALIC) overpaid for Mriya Agroholding. Such an opinion was expressed by Alexander Paraschiy, Head of Research at Concorde Capital.

However, the parties have not disclosed the transaction amount and the conditions.

"If the deal is completed and SALIC buys out all new securities from creditors at the declared price, the share of the recovery rate on the previously issued Mriya Eurobonds will reach 6.3-7.3%, which is significantly higher than the rate set at the last auction," he notes.

The redemption of the whole unsecured debt of Mriya Farming will cost SALIC up to USD 144 million. According to the expert, the purchase of 100% of the company, which has a USD 102 million debt, means that the transaction amount will be USD 246 million, or USD 1.640 per 1 hectare.

"This price seems too high for the company, which plans to receive EBITDA of USD 15 million in the current financial year," Alexander Paraschiy stresses.

Experts note that it is reasonable to compare the deal between SALIC and Mriya with last year's purchase of Ukrainian Agrarian Investments (UAI) by Kernel. In that case, the price of 1 hectare was around USD 816 (the transaction amount stood at USD 155 million, UAI land bank made up 190 thou. hectares), which is half the size of SALIC and Mriya.