One of the largest poultry farms in the Leningrad region cannot resume work

The resumption of work of the Russian-Vysotskaya Poultry Farm is being delayed: CBS Commodities has agreed to lease the asset, but the management company, LLC PO Russian-Vysotskaya Poultry Farm, is in no hurry to transfer production. The investor sees this as a deliberate delay in the process, while representatives of the agricultural enterprise insist that they must first obtain the approval of the Federal Tax Service, which holds its property as a pledge, Kommersant writes. CBS Commodities specializes in the supply of wheat, corn and other agricultural products, and also operates two elevators in the Belgorod and Voronezh regions, and a feed mill in the Leningrad region.

Mikhail Osipov, one of the co-owners of the Russian-Vysotskaya Poultry Farm LLC, the manager of the poultry farm , told the publication that he was interested in completing the transaction and launching the enterprise as soon as possible. The parties agreed on its terms, but legal grounds are necessary for the transfer of the poultry farm. “The entire property complex of the enterprise is pledged to the Russian Federation, which is represented by the Federal Tax Service. In order to transfer it to a long-term lease, it is necessary to obtain the consent of the pledge holder, ”Osipov specified (quote from Kommersant).

The Russian-Vysotskaya Poultry Farm has been closed since April. The administration of the Leningrad region previously noted that the management decided to close the enterprise in connection with plans to build housing on its territory, but after negotiations abandoned this idea. The design capacity of the asset is 20 thousand tons of products per year. CBS Commodities expects to receive the enterprise on account of the debt for the supply of feed, which is about 300 million rubles. The restart of the poultry farm may take several months, and investments in its modernization may take up to 200 million rubles. But if the deadlines for the transfer of production are delayed, then the site may become inoperable.

In early May, Novy Prospekt wrote that CBS Commodities was interested in acquiring the assets of the Russian-Vysotskaya Poultry Farm, which would allow the company to continue diversifying its business. A representative of the group then specified to the publication that CBS Commodities was interested in maintaining and restoring production at the poultry farm. “So far, there is a possibility of restarting production. However, the current owners of the factory do not seem to be interested in this, CBS believes, ”wrote Novy Prospekt.

According to the press service of the government of the Leningrad Region, the Russian-Vysotskaya Poultry Farm is in the top 5 agricultural enterprises in the region in terms of production volumes. In 2021, it produced 15 thousand tons of broiler MEAT. The company employs about 400 employees. The total revenue of the factory last year amounted to about 1.5 billion rubles.

The executive DIRECTOR of Rincon Management, Konstantin Korneev, says that, most likely, the management of CBS Commodities does not want to wait for debt collection after all the necessary collection procedures from the poultry farm - this is usually a long time, and therefore they decided to lease the asset. “That way you can get a return from operations,” he adds. According to Korneev, the poultry meat market is currently oversaturated, so it cannot be said that the poultry farm is an easy asset with a guaranteed margin. At the same time, it is extremely difficult to assess the long-term perspective due to economic uncertainty. 

“Today, the industry is in a positive economic state, but the situation on a particular asset depends on the level of its debt load and other obligations, for example, the need for capital investments to eliminate official regulations. At the same time, a change in management often highlights the accumulated problems more clearly, while the previous or current management could minimize its manifestation, ”Korneev believes. An Agroinvestor source in the industry says that the Russian-Vysotskaya Poultry Farm is a rather problematic asset in terms of ownership: most of the land was sold, transferred through various schemes for residential development. 

“The situation, in my opinion, is, of course, difficult,” says Albina Koryagina, partner at NEO Center. - Poultry production is a low-margin, viscous business, and the previous owners of the Russko-Vysotskaya Poultry Factory, apparently, gave up and decided to leave this business. The close attention of the leadership of the Leningrad region to the current situation is also understandable - an enterprise significant for the region. Most likely, Koryagina continues, CBS Commodities' interest in the poultry farm is dictated primarily by the stability of the sales channel for some of its products. “So I don’t see any particular risks here: the new potential owner will be interested in developing this distribution channel,” she commented.

The very situation with the Russian-Vysotskaya Poultry Farm does not look hopeless - with its market share of 5-6%, we can talk about the prospects for restarting the enterprise: there is sales, production capacity and labor resources are available, the expert continues. If the new owner considers this factory as part of a vertical holding being built, he may well sacrifice profitability in this link by increasing the stability of the entire group. So Koryagina sees a direct economic sense in this deal.