Avangardco announces dividends, Eurobonds buyback

Обзор облигаций 02.10.2014 The shareholders of Ukraine’s leading egg producer Avangardco (AVGR LI) resolved to pay out USD 29.5 mln in dividends (USD 0.4625 per 1 GDR, implying a 5.9% dividend yield), the company reported in its Oct. 1 AGM results announcement. The dividends to be paid amount to 12.5% of the company’s 2013 net income, which is below the level of 25% promised a year ago. They will be paid through the year end to shareholders on record as of Oct. 14. Additionally, Avangardco has announced its intention to buy back its Eurobonds in the market, promising to provide further details on the size and price of the buyback later. Roman Topolyuk: It’s hard to imagine more encouraging news for Avangardco Eurobonds, though the decision is neutral for shareholders. Indeed the dividend payout could have been lower given the company’s fundamentals worsened in 2014. Avangardco’s majority shareholder Oleh Bakhmatyuk suggested last year that the board may offer some mix of dividends and share buyback to satisfy the interests of its shareholders. In this instance, the board offered some limited package for shareholders, but also decided to take care of its holders of Eurobonds. For us, it is a sign that Bakhmatyuk decided to count more on debt markets rather than equity markets in financing the growth of his business. On the bright side, equity holders could benefit from the sooner deleveraging of Avangardco than had been previously projected. Avangardco had USD 236 mln in cash as of end June-2014, which is enough for both the buyback of all its Eurobonds (USD 200 mln outstanding, currently priced at 90% of par) and pay out of dividends.