Russia-based Don Agro to provide external legal opinion on implication of sanctions

RUSSIA-BASED agriculture company Don Agro International said it is working closely with its external sanctions counsel to procure a legal opinion on the implications of the latest imposition of sanctions and current geopolitical situation, the company said late on Friday (March 4).

In a bourse filing responding to queries from the Singapore Exchange (SGX), Don Agro added it will provide an update announcement on SGXNet "as soon as practicable" once the external sanctions counsel's opinion has been obtained.

It noted that its external sanctions counsel had reviewed and confirmed that the group is in compliance with its sanction compliance policy for the fourth quarter ended December 2021.

Don Agro - an agricultural company engaged in the cultivation of agricultural crops and production of raw milk in Russia - had also provided its own confirmation regarding sanctions compliance arising from new sanctions being imposed following the Russia-Ukraine conflict in a March 1 press release.

It had stated in its press release that none of the group, its subsidiaries, associated companies, substantial shareholders, directors or executive officers are listed on the global sanction lists or have been engaged in any sanctioned activities.

While subsidiaries are dealing with sanctioned entities listed in US sanctions lists and EU sanctions lists - including Gazprom Group, Rosneft Group, Sberbank Group and Lukoil Group - Don Agro had said these are relating to transactions which are not in the lists of prohibited and/or restricted transactions of relevant sanctions. It added that all these transactions with the mentioned entities are in compliance with the company's sanctions compliance policy.

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Don Agro provided further details on Friday - in its response to SGX - of its dealings with sanctioned entities, and said it considers its dealings with Sberbank and Rosselkhozbank "significant".

Sberbank is the only financial institution providing loans to the group currently, and Don Agro received loans of 365.9 million roubles (S$6.7 million) last year. Meanwhile, its deposits placed with Rosselkhozbank amounted to 266.4 million roubles, making up 70.7 per cent of the group's total cash and cash equivalents as at Dec 31, 2021.

However, Don Agro said, it will be able to replace and refinance its placed deposit and existing loans with other banks, if required. It added that its current available cash and cash equivalents are "sufficient to fully redeem all existing loans, if required, and the group is able to continue to finance its operations without seeking new loans".

Don Agro's dealings with the Rosneft Group and Lukoil Group involve the supply of fuels for transport and agricultural machinery to the company's subsidiaries. The cost of fuel purchased from these entities was around 3.5 per cent of the group's total cost of sales in FY2021.

The dealings with Gazprom Group include obtaining gas for heating office and manufacturing premises of the company's subsidiaries.

Don Agro shares closed at S$0.335 on Friday, up 4.7 per cent, before the announcement.