Update about war-affected assets in Ukraine (June)
In the recent update about Loan Originator’s “Chain Finance” borrower, we informed about the repayment status of repayments, plans regarding investments, and operational level. Debitum has received the latest information and data, and we have summarized it for you to read. If you are interested in the last blog article on this topic, you can read it here >>>
Important new information
- At the moment, Ukraine’s currency is experiencing volatility and has decreased its value by 19.35% against EUR compared to before Russia started its invasion. This means that any gained amount of money could reduce its value against EUR if it continues to decline. It can be that it will stabilize or decrease further, depending on the escalation of the war.
- The borrower has successfully sold some of the repossessed cars. Therefore the process of regaining funds has been started and is continuing.
Regarding repayments for claim rights related to Ukraine:
- No principle or interest repayments will happen during Force Majeure.
- Penalty interest will not be applied as a reason for delayed payments in the Force Majeure situation stipulated in the agreement.
- After the Force Majeure ends, funds for the investor’s initial investment will be distributed equally to all involved investors and will not exceed more than the borrower’s available resources.
Why there are still not happening any repayment for these assets?
Force Majeure is in place and has been extended. While it is active, no business-related payments can be sent out of the Ukraine borders.
More information about the Martial Law in Ukraine:
rferl.org/a/ukraine-Russia-martial-law-extended
Status of repayments
In May, ChainFinance borrower combined with the gained amount of sold cars, received 80% of all planned repayments of May. Due to this, the borrower has managed to gain 180 000 EUR (calculated 17.06.2022, currency rate UAH/EUR) that is transferred to a separate bank deposit account to keep excess funds in one place.
Collateral (cars) status
The borrower has managed to repossess 38 cars, and it is continuing to repossess other non-paying customer cars to sell them at a fair price. In total, 6 vehicles have been already sold in the Ukrainian market. Other repossessed cars are stored in a secured parking lot to be sold as soon as possible.
Unfortunately, the current used car prices in Ukraine have decreased on average by 30% compared to the pre-war period. Price decrease was affected by temporary legislation that allows bringing used cars from the EU to Ukraine without any customs tax as a measure to remove barriers to receiving vehicle aid from the EU. Nonetheless, since the maximum LTV for these loans was 70%, selling the car even at decreased market value will allow gaining back a significant part of the investments. Meanwhile, all the vehicles for which the borrower receives payments according to agreed payment plans will remain in possession of the borrowers’ clients.
Portfolio part of lost, damaged, or not traceable – 40 cars. Out of these cars, 19 are damaged or used by the military. 21 cars (which is 3 less than last month) are missing, and a vehicle search is taking place.
Some cars have been used to drive to Europe to take shelter from war, the amount of these cars is significantly small, but for cars for which the borrower does not receive repayments, Debitum has helped to find a company that will start to help with repossession.
Meanwhile, Debitum has helped to retrieve one car located in the EU. This was done by our ex-CEO, now Debitum Supervisory Board Member Sergei Demchuk.
Further plans
The borrower will continue payment collection and sell any repossessed collateral to regain invested capital. Funds after operational costs will be kept in a separate bank account until money transfers outside Ukraine are permitted. In addition, the borrower has cut costs by 50% by decreasing employee salaries. Debitum expects ChainFinance to receive the first repayments from the borrower once force majeure ends.
Debitum constantly monitors and requests operational and financial data from the borrower to ensure the investor’s capital can be regained at the maximum rate.