Canada’s Black Iron, implementing the investment project to create a new iron ore production facility in Kryvy Rih (Dnipropetrovsk region), has said that it received expressions of interest from European banks and export credit agencies to provide $250 to $300 million of debt.
The company said in a press release that Black Iron management continue to make sound progress arranging the financing for Shymanivske project construction.
Construction of phase one to produce four million tonnes per year of 68% iron content pellet feed is estimated to cost $436 million, as further detailed in Black Iron’s most recent Preliminary Economic Assessment. As is typical for financing the development of mining projects, based on discussions with potential investors and financiers, the company estimates that some $175 million (40%) will be equity and the balance around $261 million (60%) financed as debt, not including financing charges and working capital.
Black Iron CEO Matt Simpson said that strong interest from well known, highly regarded, providers of debt financing for project construction is seen.
“The indicative interest rates, grace period prior to starting repayment and loan duration in the expressions of interest received by the Company are very competitive. The recent announcement of the MOU between the Company and Ukraine’s government to transfer a critical parcel of land to the Company is an important milestone that both anchor offtake and debt investors have been waiting to see. The Company is currently negotiating binding terms for the land transfer, including the compensation amount, and expect this to conclude following a binding product sale (i.e. offtake) agreement as a portion of the funds invested by the offtake company will be used to cover the land transfer costs. Now that an MOU on land transfer has been reached, we look forward to commercial negotiations for project construction financing being accelerated,” he said.
Majority of the required equity for project construction is anticipated to come from offtake by a large trading company and/or steel mill that is interested to purchase Black Iron’s pellet feed on a long-term contract at a slight discount to market price in exchange for making both a prepayment and acquiring ownership in the Shymanivske project. Several multi-billion companies, including Glencore, as previously announced, are currently conducting due diligence to consider such an investment.
Additionally, there are two Asia based construction companies that have conducted site visits and expressed serious interest to invest up to $50 million of equity in kind in exchange for being awarded the construction contract.
From a sequence standpoint, discussions are being held simultaneously with equity and debt investors as both are ultimately required to fund project construction. It is likely the anchor equity and offtake investor will be announced first followed by completion of an updated feasibility study and environmental impact assessment upon which the debt financing can be secured to allow for construction start around the end of next year, the company said.
The total debt of insolvent VAB Bank and bank Financial Initiative of Oleh Bakhmatiuk to the state is UAH 29.3 billion, including a UAH 11 billion debt to the Deposit Guarantee Fund, a UAH 10.6 billion debt to the National Bank of Ukraine (NBU) and a UAH 7.7 billion debt to three state-run banks. According to a posting of the NBU press service on Facebook on Friday, the debt of the former owner of VAB Bank and Financial Initiative Bank to the central bank was secured by his personal guarantee to repay a total amount of UAH 8.6 billion and property guarantees of Bakhmatiuk’s companies.
“In order for these guarantees to turn into a real refund, the NBU filed more than 50 lawsuits against him and his companies,” the regulator said.
The central bank said that as of October 15, 19 court decisions on Bakhmatiuk’s guarantee agreements regarding the bank Financial Initiative were made in favor of the National Bank and entered into legal force, while there are no decisions regarding the VAB bank.
“Nineteen victories have not yet allowed for the repayment of debts: the sale of property by the State Enforcement Service is surprisingly sluggish,” the regulator said.
State and state guaranteed debt of Ukraine from 2009 till 2019 (mln UAH)
The total state (direct) and state-guaranteed debt of Ukraine in September 2019 increased by 1.26%, or by $1.03 billion, to $82.95 billion, according to data on Finance Ministry’s website.
According to the ministry, the state debt in the national currency decreased by 3.36%, to UAH 1.997 trillion.
In September, direct government debt in U.S. dollars rose by 1.77%, to $72.99 billion (in hryvnias it fell by 2.86%, to UAH 1.758 trillion), in particular external debt decreased by 2.88%, to $38.66 billion.
The state-guaranteed debt last month decreased by 2.36%, to $9.95 billion (in hryvnias decreased by 6.81%, to UAH 239.73 billion), in particular external one fell by 2.72%, to $9.49 billion.
In general, since the beginning of the year, the aggregate public debt of Ukraine increased by 5.91%, or by $4.63 billion, however, in hryvnia equivalent, due to the strengthening of the national currency, it decreased by 6.72%, or by UAH 143.92 billion.
According to the Finance Ministry, the share of liabilities in U.S. dollars of the overall structure of Ukraine’s public debt fell to 39.58% in September, in euros it decreased to 9.93%, in Canadian dollars to 0.18%, in special borrowing rights to 13.46%, in yen to 0.69%, while in hryvnias it increased to 36.15%.
The official hryvnia exchange rate, according to which the Finance Ministry calculates the national debt, strengthened in September to UAH 24.08/$1 compared to UAH 27.688/$1 at the beginning of the year.
JSC Ukrzaliznytsia (Kyiv) has made another payment on eurobonds in the amount of $150 million, head of the company Yevhen Kravtsov said on his Facebook page. He noted that in 2019 the company already paid off 60% of the principal amount ($300 million) on eurobonds raised in 2013. Ukrzaliznytsia intends to repay the remaining $200 million in the next two years.
“This is the second payment this year. We are paying on schedule,” Kravtsov added.
As reported, in March 2019 Ukrzaliznytsia repaid the first part of its $150 million eurobonds and paid coupon income on them, receiving funds for these purposes at Oschadbank and the State Agency of Ukraine for Infrastructure Projects.
KSG Agro Holding has signed an agreement on the restructuring of a loan debt to Germany’s Landesbank Baden-Wuerttemberg (LBBW).
The amount of the loan provided in October 2012 was EUR11.5 million, the balance of the debt was EUR8.3 million, the holding’s press service said. Some 33% of the debt, which is EUR3.2 million, is to be repaid. The agricultural holding borrowed the funds to buy equipment from the German company Big Dutchman for its pig farm in the village of Nyva Trudova in Dnipropetrovsk region (LLC Rantier).
“Successful restructuring means available working capital, which will be spent on developing existing projects and launching new ones in the field of crop production and pig breeding,” Chairman of the KSG Agro Holding’s Board of Directors Serhiy Kasyanov said.
As reported, KSG Agro in April 2019signed an agreement on loan restructuring to Big Dutchman with a decrease in debt from EUR4.8 million to EUR1.03 million.
KSG Agro in the first quarter of 2019 increased net profit by 1.6 times, to $3.46 million, while revenue fell by 12.5%, to $3.4 million. Financial income for the three months of 2019 included $4.3 million in profit from restructuring.
