Kharkiv-based agro-industrial group of companies NOVAAGRO Ukraine announced on October 30 that it had completed the acquisition of a 56.9% stake in AgroGeneration S.A., its press service said.
According to the press service, NOVAAGRO completed the over-the-counter acquisition of a total of 126.084 million shares from Konkur Investments Limited (Konkur) at a price of $0.036 per share, which amounted to $4.54 million. The shares were transferred on October 30, 2024.
Following the transaction, the composition of the agricultural holding’s board of directors was changed to reflect the share capital structure. It includes three new members: two executive directors representing NovaAgro, Sergiy Polumysnyi and Volodymyr Krasovskyi, and one non-executive director, Viktor Shkarban.
All previous board members, including Michael Blazer, Lev Blazer, Valery Demu, Neil Sigdu, John Shmorgun and Guillaume James, have resigned from the board.
Mr. Shkarban has been appointed Chairman of the Board of Directors of AgroGeneration, succeeding Mr. Blazer.
“These co-optations, with immediate effect, will be submitted for approval to the next annual general meeting of shareholders of AgroGeneration,” the statement said.
In addition, the new board of directors of AgroGeneration has also appointed Olga Shantyr as CEO with immediate effect. She will replace outgoing CEO Serhiy Bulavin.
In 2023, AgroGeneration Group produced about 72.45 thsd tonnes of grains and oilseeds, which is 8.6% less than a year earlier, with an increase in acreage by 2.5% to 29.62 thsd ha, the company’s website reports.
It is noted that the EBITDA of the agricultural holding in 2023 returned to positive values, amounting to EUR 0.3 mln, compared to negative EUR 5.8 mln in 2022. The company was still well below the pre-war level, although net losses decreased from EUR31.6 million in 2022 to EUR7.9 million in 2023, the report said.
AgroGeneration explained the decline in production by almost 9% by the forced changes in the range of crops in 2023 due to the reduction of winter wheat plantings in the fall of 2022. This, in turn, was caused by weather conditions and resulted in more than 70% of the sown areas becoming less productive after several years of sunflower cultivation.
According to the report, crop yields in 2023 increased by 30% compared to the previous year and amounted to about 4 tons/ha versus 3 tons/ha, respectively. Despite the increase in the harvest, the quality of wheat decreased and almost 100% of it was represented by feed grain, while a year earlier this figure was 80%. The agroholding explains that wheat quality deteriorated across Ukraine due to heavy rains before the harvesting campaign in June-July 2023 and due to the late sowing campaign in the fall of 2022 amid poor weather conditions.
The group’s farms harvested about 43 thsd tonnes of sunflower at an average net yield of 1.9 c/ha, compared to 2 c/ha in 2022. The total net production of corn and soybeans amounted to about 6 thousand tons.
AgroGeneration’s revenue in 2023 amounted to EUR16.4 million, down 36.7% year-on-year, due to the sale of 75.7 thousand tons (-7.4 thousand tons by 2022) of crops from the 2022 and 2023 harvests, which were sold at significantly reduced prices. At the same time, EUR 9.3 mln was received from the sale of 2022 stocks, EUR 7.4 mln for the 2023 harvest, and EUR 0.2 mln was received for other products and services.
The share of exports in AgroGeneration’s revenue in 2023 amounted to 18% in tonnage, compared to 28% in 2022.
AgroGeneration was founded in 2007. The company specializes in growing grains and oilseeds, and its land bank before the Russian military invasion amounted to 58 thousand hectares in Kharkiv region, and by the end of 2022 it had shrunk to 30 thousand hectares due to the Russian invasion. Following the operational restructuring carried out in the third quarter of last year due to the war, the holding includes seven companies. The restructuring was aimed at disposing of “toxic” assets, including 25,000 hectares of land destroyed or severely damaged by the war and located near the Russian border, which would have cost more than $50 million to maintain.
Due to Russia’s full-scale invasion of Ukraine, AgroGeneration reduced its land bank to 30 thousand hectares from 56 thousand hectares in 2022. The agricultural holding’s revenue fell by 41.1% compared to the pre-war year 2021 to EUR 25.854 million, and net loss amounted to EUR 31.595 million against net profit of EUR 14.202 million, respectively. The gross loss amounted to EUR5.608 million against a gross profit of EUR32.361 million in 2021, and the losses from the war were estimated at EUR15.448 million.
At the end of last year, the company’s total debt was estimated at EUR18.065 million, down from EUR24.599 million a year earlier, and its assets were EUR36.391 million, compared to EUR82.033 million a year earlier.
Currently, the Antimonopoly Committee of Ukraine is considering the purchase of shares of AgroGeneration S. A. by NovaAgro Ukraine LLC, which will make it the owner of AgroGeneration S. A., which would make it the owner of a controlling stake.
Konkur Investments Limited, a subsidiary of SigmaBleyzer, has entered into a conditional agreement to sell its 56.90% stake in Ukrainian agroholding AgroGeneration to Ukrainian group of companies Novaagro.
AgroGeneration said in a statement that it is about the sale of 126.1 million shares at a price of $0.036 per share and repayment of Konkur’s debt on current operations in the amount of approximately $3.191 million.
It is noted that the completion of the transaction is subject to the approval of the transaction by the Antimonopoly Committee of Ukraine and the buyer obtaining adequate sources of financing for the acquisition.
“Given the significant instability in Ukraine, including the ongoing war, a date for completion of the transaction cannot be determined at this stage,” the statement said.
Under current French law, completion of the transaction should result in a change in the composition of AgroGeneration’s Board of Directors and trigger a mandatory public offer by Novaagro to acquire all AgroGeneration shares not already owned by it.
The price per share in the said public offer will be determined on the basis of the price per share paid for the transaction with Konkur (and taking into account the repayment of debt) and confirmed by an independent expert’s valuation report.
It is also mentioned that on July 26 a request for suspension of the listing of AgroGeneration, whose shares were listed on Euronext Paris under the ticker ALAGR, was filed. Their exchange rate on July 26 was EUR0.05 per share, whereas before the full-scale invasion the shares were quoted at up to EUR0.3, and more than a decade ago at up to EUR2.5 apiece.
It is noted that investment firm SigmaBleyzer has helped manage AgroGeneration for the past 10 years.
As reported, AgroGeneration group of companies in 2022 reduced its land bank to 30 thousand hectares from 56 thousand hectares due to Russia’s full-scale invasion of Ukraine, and received about $19 million in losses due to crop losses, damage to machinery and infrastructure, reserves, resources and other assets.
AgroGeneration was founded in 2007. The company’s land bank before the Russian military invasion amounted to 58 thousand hectares in Kharkiv region, and at the end of last year it was reduced to 30 thousand hectares due to the Russian invasion. The holding company includes seven companies after the operational restructuring carried out in the third quarter of last year in connection with the war. The point of the restructuring was to dispose of “toxic” assets with 25 thousand hectares destroyed or severely damaged due to the war, located near the Russian border, the retention of which would require more than $50 million.
AgroGeneration’s 2022 revenue fell 41.1% from pre-war 2021 to EUR25.854m and its net loss was EUR31.595m compared to a net profit of EUR14.202m a year earlier.
According to the annual report, the agroholding’s gross loss last year amounted to EUR5.608m against a gross profit of EUR32.361m in 2021, while war losses were estimated at EUR15.448m.
The company’s total debt at the end of last year was estimated at EUR18.065m, down from EUR24.599m a year earlier, while assets were valued at EUR36.391m, down from EUR82.033m a year earlier.
According to a presentation from March this year, the agroholding employs about 400 permanent staff. Last year’s harvest amounted to about 80 thousand tons of grain and oilseeds, the machinery fleet includes 33 combines and 92 tractors, storage capacity – 95 thousand tons, including two elevators.
According to the data on the website of the group of companies, 56.9% of its shares belong to Konkur Investment Ltd holding, which is part of the international investment company SigmaBleyzer, 3.3% – to Green Alliance/Gravitation holding controlled by Charles Begbeder (France), 39.8% of its shares are in free circulation.
SigmaBleyzer is based in Houston (Texas, USA) and has been operating private investments in Ukraine for over 25 years.
Novaagro Group has been operating in agribusiness on the Ukrainian and international markets since 2009. It consists of four operating companies specializing in trading, export of grain and oilseeds; cultivation; warehousing; production and sale of mixed fodder, wheat flour and granulated bran, chicken meat.
“Novaagro owns five elevators with a total capacity of 326,600 tons of one-time storage. The group has a feed mill in Chkalovskoye settlement (Kharkiv region), which produces 200-300 tons/day of products. It also has an oil extraction plant with a capacity of 180,000 tons/year.
The group includes the Nova poultry complex (Kharkiv region), which has three production sites with a capacity of 845,000 birds. The slaughterhouse has a capacity of 3,000 heads per hour.
According to the Unified State Register, the ultimate beneficiary of Novaagro Limited is Sergiy Polumisny.
The French group AgroGeneration with assets in Ukraine received EUR 5.46 million of net loss in the first half of 2020, which is 68.8% less than in the same period last year.
According to a report on the group’s website, income decreased by 13% to EUR 9.47 million in the reporting period. AgroGeneration received EUR 2.48 million of gross profit in January-June 2020 against EUR 5.57 million of gross loss in the same period previous year. The company reduced its operating loss from EUR 10.76 million in the first half of 2019 to EUR 340,000 in January-June 2020.
EBITDA was positive in the first half of 2020 and amounted to EUR 2.83 million against EUR 7.77 million negative in January-June 2019.
The group’s net debt as of June 30, 2020 amounted to EUR 37.18 million against EUR 50.78 million on the same date last year.
The company noted that since the beginning of the year, AgroGeneration has sold all the harvest remaining in stocks from the 2019 season. As of the date of the report, the company had completed the 2020 harvest, which included 100% of early crops, mainly winter wheat, and 100% of late crops, represented only by sunflower.
The French group AgroGeneration with assets in Ukraine in 2018 received EUR8.52 million of net loss, which is 35.3% less than in 2017.
According to the report on the company’s website, its revenue decreased by 24.3%, to EUR41 million, gross profit by 29.7%, to EUR11.27 million. Operating profit for the year increased by 1.8 times, to EUR1.48 million.
EBITDA in 2018 rose by 11.8%, to EUR10.17 million. Net debt rose by 36.8% by the end of the year, to EUR62.16 million.
The share of export sales last year fell to 52% from 57% in 2017.
In 2018, AgroGeneration produced about 328,100 tonnes of grains and oilseeds from 105,200 hectares, which is 8.7% less than in 2017.
“The decline is due to the difficult weather conditions that affected early crops (especially wheat and barley). Despite this, the yield of AgroGeneration remains higher than the average figure in the Ukrainian agricultural sector,” the report says.
France’s AgroGeneration with assets in Ukraine has signed agreements for the sale of 28,500 ha of agricultural lands (27% of the group’s land bank) in Zhytomyr and Ternopil regions for EUR 19 million.
According to a company report on its website, this price includes land lease rights and biological assets whereas machinery and inventory will be part of a separate sale.
According to the company, after the completion of these transactions, AgroGeneration will operate approximately 80,000 hectares of land in Ukraine with close to 10,000 hectares in the West (Lviv) and 70,000 hectares in the East (Sumy and Kharkiv).
The company said that due diligence, which could lead to a price adjustment, should be finalized by the end of February 2019. A prepayment has already been made to AgroGeneration for approximately 15% of the total price and an equivalent amount will be placed into an escrow account for a maximum period of nine months after completion of the due diligence.
In addition, AgroGeneration has secured its 2019 crop financing from its historical banking partner Alfa-Bank Ukraine for a total amount of $23 million, and will top-up its financing with pre-payment agreements with its usual key trading partners.
The company has already sown, under favorable weather conditions, 34,000 hectares of winter crops, out of a total of 77,000 hectares planned.
As reported, Kusto Agro Pte.Ltd (Singapore), which owns Kusto Agro in Ukraine, was permitted by the Antimonopoly Committee of Ukraine to acquire two agricultural enterprises in Zhytomyr region from AgroGeneration – Lischynske LLC and Tereschenko Agrarian Fund LLC.
The French group AgroGeneration was founded in 2007. It grows grains and oilseeds. In Ukraine it currently processes about 120,000 hectares.
In October 2013, AgroGeneration completed its merger with Ukrainian agricultural company Harmelia.
