Milkiland, a dairy group with assets in Ukraine, Russia and Poland, expects to finish the negotiations with a syndicate of banks consisting of Austria's UniCredit Bank Austria AG and Russia's Raiffeisenbank and find a mutually acceptable solution on resolving the indebtedness in 2016 or beginning of 2017.

The group said in a financial report for the first nine months of 2016 posted on the Warsaw Stock Exchange (WSE), since September, 2014, Milkiland has been continuing the negotiations with the syndicate.

The total sum of the principle amount of the group’s indebtedness to syndicate as of September 30, 2016 stood at $58.6 million. The full amount is overdue.

The group does not specify the conditions for resolving the indebtedness.

Milkiland also said that On July 4, 2016, PJSC Credit Agricole Bank signed the amendment agreement to the loan facility agreement with DE Milkiland-Ukraine (both based in Kyiv) and thre agri-subsidiaries of the group, namely, ALLC Nadiya, LLC Uspikh-Mena (both in Chernihiv region) and PJSC Iskra (Sumy region), on restructuring of loans in the total amount of $14.456 million (EUR 13.1 million).

According to the amendment agreement, the repayment term was extended until June 30, 2019, lowered interest rates were applied to the borrower’s indebtedness.

The loan facility is secured by the pledge of the real estate of agri-subsidiaries of the group, mortgage of the production equipment, sureties from several subsidiaries of the group and guarantee of Milkiland N.V. (the Netherlands).

Pekao bank S.A. in Poland is continuing the legal proceedings under the loan agreements with Milkiland EU claiming the collection from the debtor (Milkiland EU) and guarantor (Milkiland N.V.) of the indebtedness with the total value of PLN 8.5 million (c. EUR 2.1 million).

In the reporting period Milkiland EU repaid to Pekao bank S.A. the amount of c. PLN 4.3 million (c. EUR 1.04 million) and to Pekao leasing the amount of PLN 1.9 million (c. EUR 0.46 million). Within the proceedings the bank is enforcing a write-off of the amounts from current account of Milkiland EU and selling some production equipment. Also, Pekao leasing uses out-of-court enforcement procedures against Milkiland EU to secure the repayment of the loans by the debtor.

The ourstanding amount of the respective debt to the Polish financial institutions as of October 31, 2016 stood at PLN 10 million (c. EUR 2.4 million).

In the reporting period PJSC Ukrsotsbank initiated a legal case against the group’s Ukrainian subsidiaries, namely DE Aromat, as a borrower, as well as DE Milkiland Ukraine, as a guarantor, under the loan agreement with this bank, claiming the collection of the indebtedness with the total value of c. UAH 71 million (c. EUR 2.45 million), including accrued interest and penalties.

"After several court sessions, the case was taken by the higher business court of Ukraine. Milkiland continues the negotiations with the above mentioned creditor of the group to settle the indebtedness in a mutually acceptable manner, which could envisage the signing of the respective restructuring agreement by the end of the current year," the group said.

In the reporting period PJSC Bank Forum continued a legal case against DE Milkiland-Ukraine, as a borrower, and Milkiland N.V., as a guarantor, under the loan agreement with this bank, claiming the collection of the indebtedness with the total value of $2.4 million (c. EUR 2.17 million).

This case is currently under consideration of Kyiv's appeal court, which session is planned for December 26, 2016.

PJSC Sberbank initiated the legal proceedings under the loan agreement with the group’s Russian main subsidiary, Ostankino dairy combine, claiming the collection for the debtor of the indebtedness with the total value of 368 million of Russian rubles (c. EUR 5.3 million).

Within the proceedings the bank is enforcing a write-off of the amounts from current account of Ostankino in Sberbank, Moscow Industrial Bank and VTB.

Milkiland is now continuing the negotiations with the creditor to settle the issue of the repayment of the above mentioned indebtedness, including by its possible refinancing by third party creditors.