Investors interfere with Russian Milk – Newspaper Kommersant No. 11 (7456) of 01/23/2023

The former governor of the Tver region, Dmitry Zelenin, may become a co-owner of the Russian Milk agricultural holding Vasily Boyko-Veliky. The structure of Mr. Zelenin won the auction for the sale of shares in several companies of the holding, which includes 23.5 thousand hectares of agricultural land in the Moscow region and dairy farms for 4 thousand heads. The change of control over the business may lead to a corporate conflict, lawyers believe.

On January 16–20, Debarkader LLC, the ex-governor of the Tver Region, Dmitry Zelenin, won the auction for the sale of shares in several structures of the Russian Milk agricultural holding, follows from the bankruptcy register. The shares of CJSC “Vash financial trustee”, which is associated with the founder of “Russian Milk” Vasily Boyko-Velikiy, were put up for auction. According to the results of the auction, Debarkader can get more than 19% each in Ruzskoye Moloko JSC and APK Kosmodemyansky JSC, about 3% of Raisino JSC, about 17% of Tuchkovsky JSC and almost 48% of Progress LLC for about 34 million rubles. Dmitry Zelenin, through a representative, declined to comment.

According to its own data, Russian Milk manages 23.5 thousand hectares of agricultural land in the Moscow region, farms for 4 thousand heads and a dairy plant with a capacity of 50 tons of products per day. The assortment includes more than 40 items under the Ruzskoye Moloko brand. In 2021, the revenue of the manager of the plant JSC Ruzskoe Moloko was 553.64 million rubles, the net loss was 92.85 million rubles, according to the company’s statements.

Today, a criminal case was initiated against Vasily Boyko-Veliky on suspicion of embezzlement of funds from the Credit Express bank, of which the businessman was a shareholder. In 2021, the Moscow City Court transferred Mr. Boyko-Veliky from the pre-trial detention center to house arrest. “Your financial trustee” was declared bankrupt in 2021, and Vasily Boyko-Veliky himself – in January 2023.

The second bidder for the sale of shares was Formula Business LLC, which is listed as a shareholder in the accounts of Ruzskoe Moloko JSC for 2021. The agricultural holding told Kommersant that Formula Business is an independent company that has nothing to do with Russian Milk. According to the representative of the agricultural holding, it is premature to talk about the transfer of shares to Debarkader. The co-owners of Progress, for example, have a pre-emptive right to buy, and bailiffs impose restrictions on transactions, they say in the holding. ProLegals partner Elena Kravtsova says that limiting the share by bailiffs can sometimes be a reason to challenge the auction, but in bankruptcy all restrictions are removed.

Dmitry Zelenin today heads the Association of Managers of Russia and acts as a co-owner of the Tver vegetable producer Sanachino Agro, follows from the Unified State Register of Legal Entities. According to Kommersant’s source in the industry, the lands of Russian Milk are located not far from the borders of the Tver region, and therefore could be of interest to Mr. Zelenin to expand the business. Ilya Zharsky, managing partner of the Veta expert group, says that Debarkader may try to establish control over Russian Milk, but the stakes in the companies will only allow them to influence key decisions. As Elena Kravtsova notes, the takeover of a group without an agreement with other co-owners is a game with great risks, most often aimed at further internal corporate struggle, challenging transactions and cash flows in order to build a new management system.

Streda Consulting CEO Alexei Gruzdev says Russkoye Moloko could be an attractive asset primarily because of its large land bank and dairy farms, which are likely to be expanded further. And the processing of milk at the agricultural holding has a small capacity and is mainly focused on the premium segment, he adds. According to the analytical center Milknews, the production of marketable milk in January-November 2022 increased by 3.7% year-on-year, to 22.7 million tons, also due to favorable pricing conditions. In November 2022, commercial milk cost an average of 34.2 rubles per kg, which corresponds to a historical maximum, analysts say. According to Mr. Gruzdev, the Moscow region has the potential to increase the production of raw milk by another 1 million tons per year, and the main limitation is the lack of land.

Anatoly Kostyrev