Page 14 - bneMagazine March 2023 oil discount

14 I Companies & Markets bne March 2023
GNT's Odesa port terminal is participating in the critical Grain Corridor Initiative. / bne IntelliNews
GNT has not responded to bne IntelliNews’ request for comment.
Back in December 2019, GNT took out a $75mn loan from Argentem and a $20mn loan from Innovatus. Patton said he admired the hard-working entrepreneurs who established the business during Ukraine’s turbulent mid-90s and he was happy to invest.
But by December 2021, GNT said they were unable to pay back the loan due to the fallout from the COVID-19 pandemic, leading to discussions with Argentem about restructuring.
Following Russia’s full-scale invasion of Ukraine in February 2022, GNT was once again unable to pay its debts, with Argentem agreeing to extend payments.
In August 2022, GNT revealed to Argentem that the pre-war inventory previously worth $130m was now down to a negative $7mn. ACP was suspicious, claiming that no credible reason was given for the gargantuan losses.
Following concerns over lack of transparency and misgovernance, Argentum sued Hroza and Naumenko in the UK’s High Court, which ordered the seizure of assets worth $118mn held by the co-owners.
The UK court granted a worldwide freezing order in favour of Madison Pacific as security trustee, which took control of the shares of the top holding company, GN Terminals Ltd, based in Cyprus, under the direction of Argentem and Innovatus.
Madison Pacific installed directors in GNT as well as its subsidiaries in the UAE (GNT Trade DMCC and Black Sea Commodities) and in Switzerland (Omega Terminals SA). However, despite taking control of the shares and the board, Argentum and Innovatus have yet to take over operational control of the terminal itself.
GNT have denounced the accusations and claim it is willing to repay the loan to both ACP and Innovatus in “any civilised
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manner”. They fired back at Argentem, accusing Patton of initiating a “hostile takeover”, even going so far as to say that the company is damaging Ukraine’s international reputation and disrupting grain shipments under the grain corridor, as the terminal is responsible for transporting 8.5% of Ukraine’s total agricultural exports.
“An attempt to block the grain terminal’s operations in the port threatens the grain corridor’s operation and, accordingly, Ukraine’s performance of its international food security commitments,” Volodymyr Naumenko said in an interview with Ukrainian news outlet Censor.net.
Patton batted away GNT’s allegations as a “disinformation campaign” and noted that the company had not blocked the directorship changes, despite undertaking several “aggressive steps”. He argues that GNT is “illegally occupying the terminal and inland silos”, saying that “the dispute will last until they hand over operational control”, or “repay the loan facilities”.
His main grievance with the company is what he perceives as lack of transparency coupled with serious failings in governance. Despite requests for information regarding finances in 2021 and 2022, he says GNT hasn’t provided anything verifiable.
“The problem here is that GNT ultimately decided to dispose of a huge amount of inventory in a period of time without reference to the board and without discussing it with the people that some of that inventory was pledged to. They didn't ask and they didn't approach. They didn't even allow them to inspect their inventory,” Patton stated.
“After 14 months of this kind of treatment, we reached a point where we had no information and no transparency. There's no governance; that's just not a situation we can continue with,” he added.
In his defence, Hroza claims that Olimpex, which manages the terminal, notified Innovatus on February 25 that it would be impossible to store grain securely and ensure quality due to the lack of capacity for long-term grain storage and the inability to rotate cargo due to missile strikes.
At the same time, access to the storage facilities was prohibited due to war. Once restrictions were lifted, Naumenko said there were no inspection requests from Innovatus.
“All the rest are unsubstantiated claims that the creditors’ inspectors cannot gain access to storage facilities,” Naumenko told Censor.Net.
“We invite creditors and all stakeholders to come in person to make sure that the grain is available at the terminal’s storage facilities at all times,” he added.