Biznews

Natural Resources

World's largest private coal mining company declares bankruptcy

Peabody Energy has turned to the St. Louis Bankruptcy Court with a request for protection from creditors. The company intends to cut costs and the sum of debt, which amounted to USD 6.3 billion as of the end of 2015, by bankruptcy. Peabody Energy difficulties are related to enforcement of environmental policies around the world, low prices for natural gas and coal oversupply in the market, as a result of which fuel prices have fallen to a 10-year low. The company currently employs more than 8,000 people; it has offices in 25 countries around the world. For further operating activity of the company, Citigroup will provide it with funding of USD 800 million. Most of Peabody’s US units fall under bankruptcy, while Australian units of Peabody are not included in the bankruptcy petition.

 

Banking & Finance

Swiss National Bank granted National Bank of Ukraine loan of USD 200 million

The Swiss National Bank will provide a loan to the National Bank of Ukraine in the amount of USD 200 million in several tranches, which will be used to refill the country’s international reserves. The loan agreement, which came into force on 6 April 2016, was concluded within the framework of agreements between the presidents of both countries to increase humanitarian aid from Switzerland to Ukraine. The aim of the loan agreement between the central banks of Ukraine and Switzerland is to complement financing by the International Monetary Fund under the Extended Fund Facility, which will help to stabilize Ukraine’s financial system.

 

State Policy

Ministry of Temporarily-Occupied Territories created

The Cabinet of Ministers of Ukraine created the Ministry of Temporarily Occupied Territories and Internally-Displaced Persons of Ukraine. The new Ministry shall be created by merging the State Agency for Reconstruction of Donbass and the State Service of the Autonomous Republic of Crimea and Sevastopol. Also, in the text of the Resolution it is stated that the newly-created Ministry shall submit the draft regulation on the Ministry within a month. The Ministry shall be composed of 105 persons. On April 14 the Parliament adopted Resolution No.1097, providing for introduction of the post of Minister for Temporarily Occupied Territories and internally displaced persons in the composition of the government.

 

Mergers & Aquisitions

Prospective M&A

On 21 April the AEQUO law firm held a round table to discuss the prospects of M&A in Ukraine and presented the findings of its joint research with Mergermarket (UK). The venue gathered speakers of top officials and practicing legal practitioners, moderated by Rustam Kolesnik, chief editor of the Yuridicheskaya Practika Weekly.

Denis Lysenko, AEQUO’s managing partner, informed on the depressing dynamics of the past year due to macroeconomic and political instability. He noted that 26 public deals with a value of over USD 5 million each took place in 2015, while only 4 deals were fixed in the first quarter of 2016. The closure of many ongoing projects is expected to take place during the second and third quarters. It is noteworthy that about two third of all deals in 2014-2015 were closed without attracting foreign capital. In the sectoral breakdown the findings showed increasing activity in the financial and agrarian industries, retail, energy and TMT, which is also expected in the current year.

According to Ihor Bilous, head of the State Property Fund, around 450 enterprises, including 20 big ones, are planned for privatization in 2016. The delay in the launch of large-scale privatization has been conditioned by the necessity to improve legislation and methods of value calculation, pre-privatization preparation. Among the problematic issues under considerations he named were relevance of the reduced list of enterprises excluded from privatization, and transfer of the state enterprises to the State Property Fund. In the meantime, 1,700 state enterprises out of 3,500 do not exist and should be liquidated. As for the issue of so-called big privatization, he informed about the subsequent preparations by the Odessa Port Plant (the auction is planned for June — July) and six oblenergos (regional energy supply companies).

Yuriy Terentyev, head of the Antimonopoly Committee of Ukraine, stressed the recent reform of merger control system and pointed out that the majority of applications are caused by deals that take place beyond the borders of Ukraine. He announced public discussion of the new order on concentrations.

Anna Babych, AEQUO’s corporate and M&A partner, outlined the positive prospects for M&A activity in the TMT sector and anticipated deals with investment funds in 2016. Among the options for hedging risks for Ukrainian business she noted entering foreign markets.

 

Competition

European Commission accuses Google of monopoly

The European Commission formally accused Google Inc. of violating EU antimonopoly legislation due to the dominant position of the Android operating system. According to the Commission’s data, Google obliged manufacturers of smartphones and tablets with the Android system to install Chrome browser and Google search on devices if they wanted to add popular application Play Store by Google to the menu. The company also provides financial benefits to those manufacturers and operators that install the Google Search engine on their devices. In addition, for manufacturers wish to use Google products, installation of other operating systems was forbidden. The corporation was granted 12 weeks to prepare its response, after which, in case of ascertainment of its guilt, it shall face a fine and requirement to halt the activities it was accused of. During proceedings against Google the European Commission plans to determine whether manufacturers could independently decide which applications to install on their devices. In case of evidence of guilt Google faces a fine of up to 10% of annual sales revenue. According to data for 2015, this amount could total EUR 6.5 billion.

 

Antimonopoly Committee of Ukraine

AMCU deprived Ukrainian company of rights to use REHAU brand

The Antimonopoly Committee of Ukraine has put an end to proceedings between Ukrainian subsidiary company Rehau and the production company Rehau, which has no relation to the German manufacturer. They both work in the window market under the Rehau brand. The decision issued by the AMCU means that the production company Rehau is obliged within one month to stop using the REHAU brand. Otherwise, the Committee may issue a fine of up to 5% of the sum of annual revenue. If the annual revenue figure is not available or the AMCU cannot find it, the defendant will be charged a fine of up to 10,000 tax-exempted minimums, i.e. UAH 170,000. According to the Uniform State Register, the owner of LLC Rehau is the company Rehau Gesellschaft mbH, while the owners of the production company are two individuals, Sergei Roztishevsky and Olga Stanovskaya.

 

AMCU conducts inspections of electronic auctions for seized property

The Antimonopoly Committee of Ukraine carries out inspections for the activities of institutions that organize electronic auctions for seized property, and of their compliance with requirements of legislation on protection of economic competition. The Committee examines issues of compliance with requirements of legislation on economic competition protection, in particular, of determining the procedure and activity of institutions as for the sale of seized property through electronic auctions and as for organization of auctions for selling the assets of insolvent banks on electronic trading platforms. The aim of this research is to determine the status of competitive environment on markets, its assessment, detection and identification of problems existing on markets that hinder the competition development, to ensure control over compliance with legislation on protection of economic competition and to prepare proposals as to implementing activities aimed at developing competition based on research findings.

 

Finance

Ukraine received EUR 97 million from the European Union

The Cabinet of Ministers and the European Commission, acting on behalf of the European Union, signed agreement on financing of decentralization program U-LEAD with Europe: Ukraine Local Empowerment, Accountability and Development Programme in the amount of EUR 97 million.

The new program, provided for as part of this agreement, is scheduled for 4 years and is aimed at supporting reform of local government, decentralization and regional development.

The program has two main components: improving ability to implement reforms (training of local authorities at all levels, thematic consultations, support of vocational training for executive officials, etc.) as well as creation of administrative services centers (provided for esteblishment of about 600 such centers and training of personnel).