FT: Ferrexpo on the brink of insolvency amid dispute between authorities and Zhevago

Iron ore company Ferrexpo believes its financial problems have worsened due to the conflict between the Ukrainian authorities and the company's largest shareholder, Kostyantyn Zhevago. The company has only a few weeks left to raise new capital, while unreimbursed VAT in Ukraine has reached about 90 million dollars.

Ferrexpo's interim executive chairman, Lucio Genovese, told the Financial Times that the company considers itself unfairly drawn into a dispute between Ukraine and its largest shareholder. According to him, Ferrexpo is in talks with the Ukrainian authorities.

Meanwhile, the Ukrainian government did not respond to the FT's request regarding the statements in the article.

FT reported on negotiations around Zhevago's stake

According to Financial Times sources familiar with the situation, during the capital raising negotiations the Ukrainian side allegedly hinted that some of Ferrexpo's regulatory problems could ease if the stake associated with Zhevago were reduced.

This claim is based on anonymous FT sources and has not been officially confirmed by the Ukrainian authorities.

Ferrexpo's largest shareholder is Fevamotinico, which owns about 49.3% of the shares. Zhevago is one of the discretionary beneficiaries of the trust that owns Fevamotinico. However, Zhevago himself has not been on Ferrexpo's board of directors since 2022.

Zhevago denies the charges against him and calls the sanctions and prosecution in Ukraine politically motivated.

Ferrexpo not receiving about $90 million in VAT

One of the key problems for the company's liquidity remains the suspension of VAT refunds. Ferrexpo reported that its Ukrainian subsidiaries stopped receiving refunds from March 2025 - after personal sanctions were imposed on Zhevago.

As of the end of March 2026, Ferrexpo's net VAT receivable was $90.3 million. Of this amount, $78.9 million had already been claimed for refund, while $69.4 million was refused by tax authorities due to the group's connection with Zhevago after sanctions were imposed on him.

The company is appealing these decisions in Ukrainian courts. Ferrexpo also reported decisions in its favour, but no actual return of funds under them had occurred at the time the financial statements were published.

Company needs at least $100 million

Ferrexpo has been trying for several months to raise at least $100 million in new capital. The company considers an additional share issue the most realistic way to support working capital and fund operations for about the next 18 months.

However, there is no guarantee of successful fundraising. Ferrexpo warned that if the problems with financing and VAT refunds are not resolved in a timely manner, the company or individual group companies may be forced to enter insolvency proceedings.

According to FT, after the deterioration of the logistical situation the company's liquidity reserve may now run out by around mid-September. At the end of June, available cash was about $27 million.

Possible $788 million fine added to financing problems

As previously reported by "Kurs Ukrainy", at the beginning of August Ferrexpo announced new claims by Ukrainian tax authorities against Ferrexpo Poltava Mining. They concern potential charges of approximately $788 million related to currency restrictions after the start of the full-scale war.

Ferrexpo disagrees with the tax authorities' findings and stated its readiness to appeal them.

Financial pressure has also increased due to the war. At the beginning of August the company suspended mining operations after its seaborne export capabilities deteriorated as a result of Russian attacks. Ferrexpo continues to supply some of its products to European customers by rail.

Around 6,000 people work at Ferrexpo in Ukraine. The company emphasises that its iron ore products remain in demand, but without new funding and resolution of liquidity problems the group's continued operation is at risk.

Earlier Ferrexpo suspended production in Ukraine due to restrictions on seaborne exports.

Based on materials from: Bloomberg, Financial Times