Ukrainian Grain Terminal Owners' Assets Frozen

Two American investment funds are moving to take control of one of Ukraine's largest grain export terminals over an unpaid debt in excess of $100 million. 

In 2019, the U.S. emerging markets fund Argentem loaned $75 million to the Odesa-based grain terminal operator GN Terminals (GNT). The loan has now been in default for 12 months, Argentem claims, and the outstanding balance is about $100 million. 

Working with fellow GNT creditor Innovatus, which is owed another $20 million, Argentem brought a suit against GNT's top management at the English High Court. The companies allege that GNT officials were committing fraud, taking money out of GNT and transferring it to a foreign holding company. 

“ACP and Innovatus have joined forces because of material failings of transparency and governance, and suspected large-scale asset dissipation and corporate wrongdoing. Since enforcement actions have begun, we have identified the transfer of members of the GNT Group which own silos to an entity in Switzerland which we understand is controlled by GNT Group’s Chief Financial Officer Dusan Denic," asserted John Patton, Portfolio Manager for EMEA & Asia at Argentem.  

The court has granted a worldwide freezing order against Sergiy Groza and Volodymyr Naumenko, the owners of GNT Group, and Olimpex Coupe International (a GNT terminal operating company in Ukraine). The creditors are moving to take control of GNT, and they plan to keep it in operation to ensure the flow of agricultural products to foreign markets.

"Once GNT Group relinquishes control of the port to responsible operators, these issues will be resolved with minimal disruption to the grain corridor. We are determined to continue our broader commitment to invest in Ukraine," said Patton. 

GNT's current management denies the allegations and says that the company "is prepared to meet its obligations to creditors." The company asserts that the court actions are "unnecessary to solving the issue," and claims that its creditors' actions are "indicative of an attempted hostile takeover." 

To date, GNT says that it has handled nearly 10 percent of the export volume shipped out of Ukraine under the Black Sea corridor initiative, which began in August. The company claims that a change in ownership could be disruptive for the operation of the corridor.