The State Property Fund hopes to reach an agreement with creditors of a bankrupt plant that would allow it to yield a 49 percent share to a U.S. trading company
to a U.S. trading company.
SPF Chief Mykhailo Chechetov told the Post on Oct. 23 that a government commission has adopted a plan to salvage the Severodonetsk Azot chemical plant, located in Lugansk oblast. The plan envisions shifting the assets of the state-owned chemical factory to a newly-created joint venture, which would be 49 percent owned by U.S.-registered Worldwide Chemical LLC and 51 percent owned by the state. Worldwide Chemical has been chosen by the commission as a strategic investor to inherit the remainder of the venture’s shares in return for paying the plant’s growing debts to creditors.
“I expect this plan to be approved by creditors by next year,” SPF Chief Mykhailo Chechetov said. “It became clear as far back as six years ago that this factory has not had a definitive long-term strategic development plan and that it needs a strategic investor, as it was being mismanaged by the state,” he added.
Severodonetsk Azot, one of Ukraine’s largest producers of fertilizers, was declared bankrupt in summer 2001, a year after posting Hr 49.4 million in net profits. According to Investgazeta, the company went on to generate Hr 26 million in profits in 2001, Hr 28 million in 2002 and Hr 109.6 in 2003.
Severodonetsk Azot’s spokesperson Vitaliy Butov said the plant’s debts to creditors, who are primarily barter-dealing intermediaries, stand at about Hr 10 million, just below $2 million.
The plant produced fertilizers, the majority of which are exported, valued on the market at about Hr 1 billion. Butov was unable to explain why the plant could not settle its debt, adding that the company has other debts, too.
Chechetov said the plant’s total debts stand at about Hr 150 million.
Unanswered questions
It remains unclear who stands behind Worldwide Chemical, although Chechetov says the investors are American.
Citing an SPF official, Interfax-Ukraine reported Oct. 19 that Worldwide Chemical “might be linked” to the growing chemical empire of Mukachevo-born Alex Rovt, founder of the New York City-headquartered chemical company I.B.E Trading Corporation.
I.B.E. Trading representatives in Kyiv and New York declined to confirm or deny links between their company, Worldwide Chemical or Severodonetsk Azot. Rovt currently serves as president of IBE Trading Corp., which boasts of being a leading international supplier and producer of nitrogen-based fertilizer products.
IBE Trading says it has a strong international presence with manufacturing, distribution, representative and affiliate offices in at least six countries: Hungary, Russia, Switzerland, Turkey, the United States and Ukraine. It remains unclear, however, how many manufacturing facilities the group owns. The company’s website does not provide its financial results.
Severodonetsk Azot’s Butov said the plant’s management does not know who stands behind Worldwide Chemical, though it suspects that I.B.E. Trading Corporation is somehow connected to the firm.
“What I know for certain is that Worldwide Chemical is a part of a consortium of companies, some of which have had business relations with our plant,” Butov said.“I.B.E. Trading could be part of this consortium,” he added. “They have a relationship with our company,” Butov added.
