Agromino anticipates possible difficulties in recovering the prepayment for undelivered fertilizer
Agromino A/S (the “Company”) anticipates possible difficulties in recovering the prepayment for undelivered ammonium nitrate fertilizer in the amount of UAH 40,537,520 (approx. EUR 1.4 million) from a supplier under the contracts for supply of the ammonium nitrate.
In December 2016 the Ukrainian subsidiary of Agromino A/S conducted a tender procedure for the purchase of the fertilizer ammonium nitrate. As a result of the tender procedure the reputable Ukrainian company (the “Supplier”) with whom the Agromino Group Ukraine had stable and successful business relationships for the past 5 years with circa 26.6 thousand tons of fertilizers delivered during the cooperation period, having offered the best terms for the delivery of the ammonium nitrate, was chosen to supply the fertilizer by spring 2017. The contracts for supply of ammonium nitrate (the “Contracts”) that were concluded provided for 100% advance prepayment – payment term employed by all Ukrainian suppliers of chemical fertilizers.
To date the Supplier has only partially fulfilled its obligations under the Contracts and failed to deliver the ammonium nitrate worth UAH 40,537,520 (approx. EUR 1.4 million).
The delay in the delivery of the remaining part of the fertilizer under the Contracts, as explained by the Supplier, was caused by the fact that all ammonium nitrate production plants in the territory of Ukraine temporarily stopped their production activities. Neither set dates of the delivery nor guarantees has been provided by the Supplier, which is why the Company refused the delivery of the remaining fertilizer under the Contracts and arranged for the purchase of the non-delivered volume from another supplier. The Company’s fertilizer needs were thus fully covered for the spring season 2017.
The Company claimed back the money for the non-delivered ammonium nitrate from the Supplier in the amount of UAH 40,537,520 (approx. EUR 1.4 million) (the “Claim”) and accrued penalties for breach of contract in the approximate amount of UAH 2 million (EUR 0.07 million) (as of the date of this press release).
The Supplier has suggested postponing the settlement of the Claim to the Company by 01.09.2017 but no hard guarantees for fulfilment of these obligations have been provided so far. Given the current situation with the ammonium nitrate in Ukraine, the Company hereby acknowledges the risk of the Supplier defaulting on its obligation under the Contracts on settlement of the Claim.
The Company will keep the market updated in relation to the potential legal steps to be taken and overall progress in recovering the Claim.
Investor enquiries
Mr. Simon Boughton, CEO of Agromino A/S
Tel: +372 6191 500, e-mail: mail@agromino.com
About Agromino
Agromino is an integrated soft commodities production, storage and trading company with operations in Ukraine, Russia and Estonia. Agromino shares are traded on the main market of Nasdaq Stockholm.
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This information is information that Agromino is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 15:00 CET on 11 May 2017.