Ukrainian poultry producer MHP is preparing a bondholder identification list ahead of a coupon payment on a US dollar bond due on March 19, though the company says the process is not a prelude to a default.
A source close to MHP said the list was being prepared ahead of releasing a statement on Monday regarding the status of the bonds.
"A press statement will follow on Monday as to the situation with the bonds," said the source. "In order to have that discussion with investors, you need to have a listing of who owns them, as that ownership tends to change around. So this is to get an up to date mapping." Monday's statement will cover any market sensitive information, the source said.
Another source at the company said there were no plans to default. "For obvious reasons we are of course very busy in our shareholder and bondholder engagement, but the company will withstand this just like the country," said the second source. "No drama, no plans to default."
The company is heading into the weekend with a US$10.9m coupon coming due on its US$350m 6.25% September 2029s.
"The interest payment is in effect on Monday because that's the first working day, and then there will be a 30-day grace period, which will be addressed in the statement," said the first source.
"We are trying to do the best we can for all our stakeholders, bondholders, shareholders, and most importantly the number one priority is the employees. Once they're safe, the company will see if it can continue operating. It is the last ongoing chicken producer of any substance in Ukraine and it has a mission to feed the people of Ukraine. It is about balancing all those priorities."
MHP said that on March 12, Russian shelling in the Kyiv region had started a fire in a warehouse that had led to the destruction of US$8.5m worth of poultry products. The warehouse was Ukraine's largest and used for the storage of frozen products and mainly used by large retail chains in Ukraine.
MHP said on March 14: "At the time of this release, around 8,500 tonnes of poultry (potential financial adverse impact of more than US$20m) is at risk where MHP has a limited access to the warehouses in the southern regions of Ukraine and in the Kyiv region, primarily due to destroyed infrastructure supporting logistics (destroyed roads and railways)."
The 2029s are quoted at 47/51, according to Tradeweb. MHP has two other US dollar bonds outstanding, its US$500m 2024s and its US$550m 2026s. The next coupons on those bonds are due on May 10 and April 3, respectively.
Like many Ukrainian entities, MHP’s business has been through the wringer since Russia’s annexation of Crimea. The company only returned to net profit in 2016, when it made US$69m after net losses of US$126m in 2015 and US$412m in 2014. But despite all the hardships, and unlike other corporates from Ukraine, it did not undertake a debt restructuring and continued to service its debt.
Adds second source saying no plans to default