Astarta-Kyiv remains in breach of certain debt covenants — Concorde Capital

The agro-industrial holding Astarta-Kyiv remains in breach of certain debt covenants, which prompted it to reclassify EUR 112 mln from non-current to current debt, Concorde Capital Analysts noted.

Management expects the leverage covenants will be in breach in 2019 as well, and the company reported that all the banks are aware of the situation and “have a firm intention to continue with Astarta as the borrower.”

"Given the weak sugar prices, we were expecting rather weak P&L for Astarta, but the reality turned to be worse than we anticipated. Clearly, such a result will be treated negatively by the stock market. The year 2019 does not promise significant improvement in commodity prices, but we expect some improvement in Astarta’s P&L this year as a result of its measures to improve its operating efficiency," Alexander Paraschiy, Head of Research at Concorde Capital, notes.

Astarta’s net debt reached EUR 295.4 mln as of end-2018, which is 2.3x, or EUR 165.2 mln higher yoy. The increase was mostly the result of EUR 75 mln in new debt attracted and the recognition of EUR 77 mln of lease liabilities as debt (by adopting IFRS 16 rules since 2018). The boosted net debt and worsened P&L resulted in the deterioration of the company’s Net Debt to EBITDA ratio to 5.2x as of end-2018 (or 3.8x, excluding lease obligations), which is a significant contrast compared to its 1.1x ratio as of end-2017, Concorde analysts comment.

Previously Astarta-Kyiv reported EUR 21 million losses for the year 2018 comparing to the profit of EUR 62 million a year ago.