Mriya: inside view on past troubles

01 February 2019

Ton Huls, chief financial officer (CFO) at Mriya Farming, summarized three years of his tenure within a crisis management team at the controversial agroholding and revealed the details of Mriya’s restructuring to Landlord.ua. 

After piling up $ 1 billion of debts and declaring the inability to pay them back, in February 2015 Mriya agroholding went under control of its European and American creditors. The foreign investors appointed a new management team that had to deal both with financial and reputational losses of the agroholding. Given the complexity of Mriya’s structure, it took the new managers some time to identify the linkages among the companies inside the holding. They identified 170 related companies in the structure of Mriya, including 140 subdivisions in Ukraine and 20 subdivisions in Cyprus. 

In total, the agroholding attracted funds from 27 creditors using a complex illegal scheme, based on which the same loan could be borrowed by one company and secured by another, whereas the profits from operations of both companies were consolidated on accounts of a third company, hardly related to them. Accordingly, the borrowed funds were neither invested in business development, nor paid back. Furthermore, there were no independent audits that could reveal the fraudulent schemes of the former top management. 

Therefore, the new management team together with Mriya’s creditors decided to establish a new entity named Mriya Farming and to transfer there all remaining assets, as well as collateralized and non-collateralized debts of Mriya. Some of the companies were sold or liquidated; the others underwent restructuring and were integrated into a new entity with their assets, cash flows, debts and collaterals. The terms of further cooperation and debt repayment were discussed with each creditor separately. 

“Having worked within our team for three years, I can openly state that the case of Mriya is all about fraud. There is no universal solution to the problem of business fraud. However, indicators such a as sudden increase of enterprises in the holding’s structure, unusually large amount of transactions, unreasonable changes in business registration or appointing random persons to senior positions would look suspicious to me,” – said Huls.

In September 2018, Mriya was acquired by SALIC for $ 232 million. By that time, the company’s total debt load had been reduced from $ 1.1 billion to $ 309.5 million. Today Mriya Farming operates 165,000 ha in 6 regions of Ukraine.