France's AgroGeneration with assets in Ukraine intends to issue subordinated bonds redeemable in shares with preferential subscription rights for approximately EUR 65 million, reads a press release of the group.

The company intends to issue 650,000 subordinated bonds, with a nominal value per bond of EUR 100 issued at par, that will be in part guaranteed by offset with the existing bonds. The fixed annual yield is 8%. The coupon frequency is half yearly.

The bonds will mature in 2019. The repayment is the following: 192 new or existing shares for one subordinated bond.

The bonds may be redeemed in shares before maturity on each coupon maturity date and will confer a right to a prepayment premium in the form of additional shares for a maximum of 28 new shares per subordinated bond.

The subordinated bonds will be listed on Alternext of the NYSE-Euronext in Paris.

A prospectus may be launched in the first quarter of 2015.

According to the press release, the aim of this issue is to replace existing bond debt amounting to EUR 55 million and raise an additional EUR 10 million in cash.

A number of developments has made it necessary to reinforce the balance sheet: a significant imbalance between equity that has been severely impacted by the hryvnia's devaluation and an uncertain geopolitical climate in Ukraine leading to difficulties in obtaining reasonable terms to finance the company's production cycle with potential for disrupting operations.

In light of this situation, AgroGeneration has obtained the consent for this operation from its main bondholders, including Konkur, representing almost 80% of outstanding bonds. These bondholders have undertaken to subscribe to this issue by offsetting their bond debt, on the basis of one new bond for each existing bond. The bondholders will be consulted at a general meeting to be held on 15 January 2015 for this purpose.

In the absence of a unanimous decision, AgroGeneration would be required to enter into a fast track financial safeguard procedure, whereby the bondholders would vote again by a two thirds majority in favour of a debt restructuring plan already accepted in the conciliation procedure. If the fast track safeguard procedure was to be approved by the court, it would thereupon be construed as an undertaking by all bondholders to subscribe to the subordinated bonds.

Shareholders, who must also approve this transaction at a general meeting to be held on 5 February 2015 will be able to participate in this issue by exercising their preferential subscription rights, and in this way avoid dilution.

If the amount of subscriptions in cash exceeds EUR 10 million, the bondholders would then receive payment in cash for the portion of their bond debt which is not offset.

AgroGeneration was established in 2007. It grows grains and oilseeds in Ukraine. It cultivates near 120,000 hectares of land in Ukraine and around 16,000 hectares in Argentina.

In October 2013 AgroGeneration finished merging with Ukrainian agrarian company Harmelia.