Before the war, Oschadbank's share in Nibulon's loan portfolio was 4%, today it is 14%

Interview with Andrii Vadatursky, owner of one of the largest grain market operators in Ukraine, JV Nibulon LLC, and Yurii Katsion, Deputy Chairman of the Board of Oschadbank in charge of corporate business

- What is the total value of Nibulon's loan portfolio, and what is the status of its restructuring?

Vadatursky: “For 31 years before the full-scale invasion of Russia, Nibulon had been investing more than $2.3 billion. We created a complete ecosystem to support the Ukrainian farmer, which included 27 elevator complexes logistically connected by three modes of transport: road, rail and water. To do this, we had to revive the shipbuilding industry in Ukraine, shipping on the Dnipro and Southern Bug rivers. This was done in cooperation with state and private banks and international financial institutions. The company was developing, and before the full-scale invasion, Nibulon employed about 7,000 people, and our debt to banks reached $530 million.

The war broke out. The company, on the one hand, suffered very seriously, and, on the other hand, for some time it could not perform its functions, while it was necessary to fulfill obligations to banks, partners, and employees. One of the first tasks after the formal changes with the inheritance of the company and my appointment as CEO after the death of my father, Oleksiy Opanasovych, was to get acquainted with the banks. As the head of the company, I had to think about restructuring loans and renegotiate with creditors. I immediately chose the path of maximum transparency and regular reporting, which, as we can see, has yielded results.

Now our portfolio in Ukrainian banks has been fully restructured, and in international banks it is at the final stage. In the first two weeks, I talked to 26 heads of banks and financial institutions. Everyone sympathized, everyone understood, but I could not count on quick decisions. In general, my expectations regarding the restructuring were that international institutions would be more flexible and make decisions faster, because they were not affected by the war and have greater capabilities. In practice, international banks were slower to respond, and we have only one bank left that cannot agree on the terms of restructuring. This is a Dutch bank FMO with mixed capital. Part of its structure is owned by commercial banks that supported us, and the other part is owned by the state, which also supported us. But for some reason, the bank still cannot make a decision. At the same time, there were concerns about the position of state-owned banks, which, like Nibulon, lost a lot.

- Why?

Vadatursky: Because of regulation. These are state institutions. Everyone usually believes that state institutions cannot be effective a priori, that the state is an inefficient owner.

I clearly remember the first communication with the management of Oschadbank. It was the only bank that asked, “How can I help you?”. I was shocked and unprepared for this question. It was made public when we gathered all the banks at the same time. Subsequently, it was Oschadbank that was one of the first to sign a restructuring agreement that postponed the time for repayment. In fact, we were given time to rebuild the company to gain strength and then repay the loans.

I would like to note that Oschad is one of the few banks that, at the very beginning of the war, in May 2022, when the level of uncertainty was at its highest, gave Nibulon an operating loan of almost $6 million. This fact should not be underestimated, because it is not just a loan - it is an act of trust that gives hope, which is very important for a businessman. It is an act that gives you the realization that you will be supported today and tomorrow. I am grateful to the management and people of the state-owned Oschadbank for their consistency and financial assistance in the most difficult times. We also understand that this is a continuation of the government's targeted policy to support domestic business. We are grateful to the government and the NBU for implementing the lending development strategy.

- What was the share of Oschadbank in Nibulon's loan portfolio at the beginning of the war, and what is it now?

Vadatursky: During the restructuring, Nibulon adheres to the pari-passu rule, which means the same conditions for all players. Of course, we are now receiving new funds, our loan portfolio is changing. Oschad's current share in it is about 14%. In general, we distinguish two areas of financing: solving current problematic issues and investment activities for development. We consider and address both areas with banks in parallel. By the way, the financial world also did not understand how to act in a time of war - there are no such rules, they are not written. There was a question of leadership. It is about those people who can be the first to make a decision and take a risk. Financial decisions made by people on their own, without looking back at others, are respected. They create added value in both the financial and agricultural sectors. Thanks to such decisions, we continue to invest in Ukraine during the war.

- You said that Nibulon received its first loan in May 2022. And all the media have recently written that you have raised funding from Oschad again.

Vadatursky: My father, Oleksiy Opanasovych, received the first loan at the beginning of the war. We have already repaid this loan, it was a short-term loan. We received the second loan of $20.3 million during the restructuring in October 2024.

- What are the terms of this loan? What is the interest rate? What is the repayment period? In general, during the war, what kind of collateral can be used?

Vadatursky: Regarding the collateral. We had an agreement that the bank would help us complete the infrastructure on the Danube. This is our alternative export route. Thanks to this investment, Nibulon was for some time the only company that bought grain from Ukrainian producers, supported prices, and brought foreign currency into the country. We are talking about hundreds of millions of dollars, almost a billion dollars a year. We used the new terminal built in Izmail as collateral to obtain and replenish working capital.

As for the market rate, it is lower than the offers of international institutions. This is an illustration of how risk is viewed by different institutions. Ukrainians are already getting used to the current realities, they understand how to work and survive. We assess risks differently than international institutions. I am pleased and think it is right that the private sector of the economy, strategic enterprises, I mean Nibulon, have been creating added value in the Ukrainian economy for several years in a row together with a state financial institution. It is very right that state institutions and the private sector of the economy within the state work together without waiting for help from the outside. A strong Ukrainian economy is a strong state. A strong state is a victory. This is a clear recipe.

- What is the credit limit for Nibulon in Oschad? What does it depend on?

Vadatursky: We are now close to our limit in the current environment. Its level is influenced by many factors, including the situation in the company, in the bank and the capabilities of the National Bank of Ukraine, which is the regulator.

Katsion: Our limits also take into account the military situation in the country. The $6 million provided to the company at the beginning of the full-scale war was repaid in good faith. This was a demonstration that the company is ready for further financing and fulfillment of restructuring conditions. This allowed us to decide to further increase Nibulon's credit limit by another $23 million. I would like to note that before the full-scale war, Oschadbank's share in Nibulon's loan portfolio was insignificant - about 4%. Today it is about 14% of the total funding limit.

- How realistic is it now to cover some loans with others? How is this issue being monitored?

Katsion: We understand the military risks and the realities in which we operate. Answering the question of why we financed the agricultural holding even in such conditions, I would like to point out that as a state-owned bank, we realized our institutional responsibility before we received such an instruction from the shareholder. Oschadbank did not close lending limits to any company, but rather started to provide additional financing. The portfolio of loan agreements concluded by Oschad with agricultural enterprises, food and processing companies in the large corporate business segment has tripled during the full-scale war, from UAH 3.3 billion in 2021 to UAH 9.9 billion in October 2024. Most foreign banks unfroze lending much later, about six months to a year after the start of the full-scale war. Our colleagues take a pragmatic approach to life, as written in textbooks: there is a crisis, you need to close all limits, preserve funds or shareholder capital or depositors' money as much as possible - no need to take additional risks.

But war is not just a crisis. War is much worse and deeper. Individual events during the war are crises. First, it was the 2022 sowing season crisis, then the fuel and logistics crisis. New challenges arose, and we worked with them to support our clients. We were looking for the best approaches and options to respond to the challenges as a state institution, in cooperation with the government and international partners, and not just acting as a bank.

The war continues. There is no denying the constant military risks for business. Moreover, there is no way to insure them today. No program available to the agricultural or any other sector covers 100% of war risks. Insurance provided by foreign partners is point-based and individual. You can count on one hand the cases when it was provided.

Insurance under the Export Credit Agency, which is required by law and expanded as a tool, is also not a panacea, as it provides for full payment only if the business has completely lost its ability to generate cash flow. If, for example, one out of ten power generators is partially destroyed, the business is not compensated for its losses. Accordingly, this is not a tool that is a one hundred percent incentive to invest new money and take new risks.

When making a lending decision, the bank looks primarily at the company's ability to generate cash flow. It is important for us whether there is a profitable activity and whether it is possible to return to it. It is important that the business model is economically viable, so that by attracting bank financing, the company can reach pre-war levels or resume its normal operations.

Vadatursky: No bank will be happy if the funds received are used to repay loans. That is why Nibulon proposes projects that improve its financial position, and thus will be able to repay the loans it has received. The bank considers this a normal practice.

I agree with Yuriy about the risks that cannot be insured today. Nibulon is in a similar situation to the insurance company PZU Ukraine, which has not recognized the full extent of the losses incurred and confirmed since 2017. We have been defending our rights in courts for six years in a row.

Insurance of refunds during the war is a risk that cannot be calculated in advance, on the one hand, because the price of such insurance is very high. Secondly, it is not a guarantee that losses, if they occur, will be compensated.

- Speaking of insurance, do you expect any changes in the near future?

Katsion: There are several instruments on the market today - programs of international financial companies, such as MIGA, DFC, which provide war risk insurance for foreign investments in Ukraine. For example, an investor (Dragon Capital - IF-U) is building a logistics warehouse in Lviv region, which was insured for €10 million. This is the first precedent for such insurance. But unfortunately, there is still no mass affordable product for everyone.

There is an initiative being developed by the National Bank of Ukraine and market participants that will probably include the principle of compulsory war risk insurance with the creation of an insurance fund to create a way of compensation and a source for compensation for possible war risks through contributions. Discussions on this instrument are ongoing. Entrepreneurs operating in the high war risk zone note that the decision in the current version may lead to excessive losses for continuing their normal operations and will not add any benefits. The NBU is currently finalizing the initiative in a dialog with businesses.

Vadatursky: The insurance market today is partially operational. Some companies that understand and can control risks are able to expand their share in the market, which still remains promising. On the other hand, companies that are not very creative in their approach to the situation are following a template. But what is happening in Ukraine today does not fit any template. So these companies are losing their market share and, indirectly, their business. For some entrepreneurs, it is a crisis, for others, it is an opportunity.

I agree with Yuriy that the government should intervene and create more favorable conditions for risk protection and insurance in Ukraine. By the way, Nibulon received loans from the Danish government, which itself insured these risks because it supports its producers first and foremost. The political component is support for Ukraine. We need to implement the risk insurance instrument to insure Ukrainian companies and Ukrainian risks. This is an important component in the work of both the financial and real sectors of the economy.

- How risky is it for Nibulon to attract foreign currency loans?

Vadatursky: We have never had a question about the riskiness of foreign currency loans because we are an export-oriented company. Currency risk has never been something special for us. We have always controlled it, and it did not affect the company's operations.

- How much do you need investment and project loans now?

Vadatursky: Thanks to Oschadbank, we have now resolved the issue of the anticipated need. We are not currently looking for additional funds.

- You have repeatedly participated in foreign conferences, for example, in London and Berlin. Do such speeches help you in any way?

Vadatursky: For me personally? For me, it is an additional burden. I am not very willing to go to meetings. But I understand that public speaking is part of my job.

Katsion: I strongly disagree! You are doing a great job of showing by example how to work with financial institutions. It is solely due to your company's open stance that partnerships are being built and lenders are responding. There are no limits for information-closed companies. No one is given anything. Using your example, the market sees two-way traffic on the road to fulfill mutual obligations. Nibulon has never breached its obligations. The company paid interest, made absolutely all mandatory payments. This gave us the opportunity to communicate with the Supervisory Board, to demonstrate to the foreign representatives on it how a normal businessman should work and what position to take towards creditors. This is the only way to expect a positive response.

At first, many foreign lenders were skeptical of Oschadbank, saying, “What are you doing, what new loans?” Banks would stand still for six months or a year, and then they started to follow us. In the end, foreign financial institutions are also ready to provide new, fresh money to Ukrainian businesses.

Vadatursky: You are right. I am in favor of openness. It's just that usually at such events, there are too many slogans from the stage, while real actions are needed. At conferences, I tell the story of Nibulon and thank them for their help. For example, in Berlin (at the URC-2024), I thanked the banks that helped the company and talked about positive cooperation projects. And in London, I was invited by the former Minister of Communities, Territories and Infrastructure Oleksandr Kubrakov, who once supported Oleksiy Opanasovych in developing an alternative export route across the Danube. It was a difficult and necessary decision that not only helped to stabilize the situation in the company but also to ensure the survival of the industry. This is a great example of the government's proactive stance that is worthy of emulation.

We also remember how business support programs were introduced. At first, the state lending program 5-7-9 was adapted to the agricultural sector, which was later expanded to cover absolutely all sectors. Then there was a request from the government to banks, including state-owned ones, to prioritize their activities to support strategic companies such as Nibulon. And the banks began to respond. It was a synergy between the government and banks to provide businesses with this support tool.

Any crisis is also a window of opportunity. I hope that, despite all the difficulties, the government, the state, and government agencies will learn to work together properly. Together, we will be able to create added value, and Ukraine will become much stronger and will definitely flourish. I see this as the secret of the state's success.

To read more of this interview https://interfax.com.ua/news/interview/1027398.html