Business news from Ukraine

Spanish investor claims loss of more than UAH 20 mln due to raider takeover of company by its Ukrainian co-founder

Spanish citizen Angel Miguel Cerezo Gallardo estimates losses from the raider takeover by the Ukrainian co-founder of the Selecto Markets company, of which he is a co-founder, at UAH 20 million.

As the Spanish citizen said at a press conference at the Interfax-Ukraine agency on Tuesday, together with Ukrainian partners, he planned to develop a chain of grocery stores in Ukraine with the supply of products from Spain and other European countries, created the Selecto Markets company, invested in first store in Kyiv, delivered equipment and goods.

According to him, one of the co-founders of the company from the Ukrainian side was Maksym Marshchivskyy, who at that time headed the distribution direction in the Furshet retail chain. The co-founders, among other things, planned to supply European products to Ukrainian retail chains, as well as develop their own network of Selecto Markets stores.

However, according to the Spanish investor, Marshchivskyy, without any reason, refused to pay for goods imported from Spain and other European countries by the Spanish businessman’s companies, stopped paying local suppliers, blocked the Spanish partner’s access to the company’s accounts and documents, and also “decided to personally manage the company and re-register for himself.”

In turn, Cerezo Gallardo’s lawyer Hennadiy Borysychev noted that law enforcement agencies “are in no hurry to enter information about criminal offenses under Articles 219 and 191 of the Criminal Code into the unified register of pre-trial investigations, as well as to investigate them.”

“We will have to go to court to declare the investigators’ inaction illegal and in court to oblige law enforcement agencies to initiate criminal proceedings,” he said.

Borysychev clarified that the matter concerns the actual raider takeover of the Selecto Markets company by Marshchivskyy.

The lawyer also noted that, according to information available to Cerezo Gallardo, Marshchivskyy is currently abroad, presumably in the United States.

“Any country that is at war, especially with a nuclear state, is not very attractive for investment. But if you add to this the fact that law enforcement and government agencies cannot protect investors, it can lead to bankruptcy of the state,” he said.

“We want to use the example of this case to prove that justice and law enforcement agencies really work in the country, that it is really possible to invest in our country,” he said.

According to the lawyer, representing the interests of Cerezo Gallardo, he intends to “take other steps to stimulate the investigative authorities in a legal way so that they actually investigate these cases.”

In turn, another co-founder of Selecto Markets, Eugene Zhevagin, said at the press conference that since the start of the full-scale invasion, Cerezo Gallardo “not only did not leave Ukraine, but is actively helping it, supplying humanitarian aid, ambulances, and medicines.”

“He doesn’t just invest money, he helped and is helping everyone who needs it, he believes in Ukraine. We really hope that by making this case public, we will get a positive result,” Zhevagin said.

The Spanish investor contacted the Embassy of the Kingdom of Spain in Ukraine to assist in a fair resolution of the case.

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Group of Israeli investors plans to open modern sports complex in Bucha

A group of Israeli investors is planning to open a modern sports complex of 2.7 thousand square meters in Bucha with an expected investment of $1.2 million, writes The Jerusalem Post.
“Like many other cities in Ukraine, Bucha is in the process of reconstruction and is receiving an influx of international budgets. However, funding is not enough. Many cities in the country are unable to cope on their own and need the help of entrepreneurial companies and foreign executive companies in a variety of sectors, especially in real estate, health and recreation, and infrastructure,” Alex Sotovsky, a representative of investors, was quoted as saying.
It is reported that the future sports complex in Bucha, located in a new modern shopping center, built in the city two years ago. Opening of the sports complex is scheduled for August of this year.
There will be swimming pool, heated swimming pool for children, special pool for infants, spa-area with locker rooms, Jacuzzi, sauna, specialized halls for various sports disciplines, gym, functional training zone, special areas for individual and group trainings, martial arts complex and center of fun activities for children, including summer camps, various sports sections and play rooms.
Sotovsky said the physical revitalization of Ukrainian cities must be complemented by the psychological and emotional healing efforts needed by residents, especially those who live in conflict-ridden areas.
“Many studies show that exercise has a positive effect on the psyche and is very helpful in reducing stress, combating anxiety and improving mood. In Ukraine, people are craving it. They are looking for familiar points of sanity and normality. Ukrainians are trying to get back to normalcy and rebuild their lives, including through sports,” he added.
He said there has already been a significant increase in demand for gym registrations in the country’s main cities, and the flow is expected to increase as the country returns to normalcy.

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In November alone, investors withdrew from cryptocurrency funds more than $19 billion

Global funds investing in cryptocurrency assets experienced a $19.6 billion investment outflow in November amid the collapse of digital currencies and the bankruptcy of the FTX exchange, writes The Wall Street Journal citing data from research company CryptoCompare.
Thus, cryptocurrency funds lost about 14.5% of all assets under management, and the cumulative figure fell to its lowest level since December 2020.
Bitcoin and ether (Ethereum) make up the lion’s share of the funds’ investments, and they also invest in exchange-traded instruments and other products.
CryptoCompare tracks the performance of 20 funds, and 19 of them showed negative returns in November. The only fund that remained positive specializes in betting on bitcoin decline: its yield was 18.2%.



The Black Iron Canadian mining company, which is implementing a project to create a new iron ore plant in Kryvy Rih (Dnipropetrovsk region), has chosen Cargill (the United States) with the right to purchase the first 4 million tonnes of production per year, which will provide financing for the project in the amount of $75 million.
According to the company’s press release on Monday, May 10, the agreement will be concluded subject to the completion of the due diligence of the project and the successful completion of negotiations.
“Cargill will offtake the production and extend financing of $75 million for the construction of the Project through a finance facility. Drawdown on this funding will be subject to certain conditions being met, as is customary for this type of transaction, mainly related to the Project being fully permitted and financed for construction. Black Iron and Cargill will now start work on definitive binding offtake and financing agreements which reflect the Proposal,” the company said in the press release.
It also clarifies that based on the proposal agreed between Black Iron and Cargill, the offtake agreement will be for an initial term of ten years and will include a profit-sharing component which will align the interests of both parties and thereby generate a strong interdependent relationship of benefit to both parties. On the profit share, Black Iron will receive 100% of the 65% iron content fines benchmark price, currently $230 per tonne, and share with Cargill a portion of the incremental sale price of its 3% higher (68%) iron content and low impurity magnetite product.
“Black Iron and Cargill Metals agree that, as the world is becoming more environmentally conscious it will naturally turn to ores with a higher iron content and in forms such as pellets/pellet feed that reduce emissions in the production of steel,” the company said in the press release.
At the same time, it is noted that the Black Iron’s planned 68% iron content magnetite pellet feed is in the top 4% of global production by iron content and is anticipated to reduce emissions generated in the production of steel by an estimated 30% as compared to the more commonly consumed 62% iron content hematite fines. It is envisaged that the high-quality product from the Shymanivske iron ore project will attract a premium price in a variety of markets.
Black Iron’s CEO Matt Simpson said: “Black Iron received several offtake and investment proposals and chose Cargill based on its proposal striking the optimal balance of investment quantum, structure and shared vision on the increasing demand for high-grade ore as the global ferrous industry is shifting to become greener.”
“Cargill brings tremendous value not only in strengthening the project funding with a $75 million financing facility but, more importantly, its global network and local footprints, unique industry insight and successful experience in the technical marketing of high-grade ore to customers around the world,” the company’s CEO said.
In turn, in the press release, the company quotes the words of Lee Kirk, Managing Director of Cargill Metals, who announced his readiness to help finance the Black Iron’s Shymanivske Project.
“A relationship with Black Iron would be an excellent fit with Cargill Metals’ growth strategy to develop a high-grade and CO2 reducing iron ore portfolio, to help customers navigate the environmental and carbon challenges and opportunities ahead, and to support the sustainability efforts and low carbon ambitions of the ferrous industry,” the top manager said.
According to the attached certificate, Cargill has operated in Ukraine since 1991 with offices in several cities to support its more than 500 in-country employees. Cargill’s main Ukraine businesses are in the agricultural sector and include a deep-sea vessel terminal at Port Yuzhny close to the terminal Black Iron plans to use to ship its iron ore.
The selection of Cargill as Black Iron’s preferred offtake purchaser has triggered the following activities to bring the Project to a fully financed state for construction: update of the Project’s feasibility study will commence upon receipt and review of proposals already requested; selection and negotiation of binding terms with the preferred engineering, procurement and construction contractor who proposes to invest $65 million in the Project; commencement of third-party due diligence with a consortium of major international financial institutions on binding agreements for senior debt, $100 million royalty investment and political risk insurance.
The above activities will be supported by the outputs from the environmental impact assessment and Ukraine land transfer work currently ongoing which were previously announced.

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Head of Zhytomyr Regional Administration Vitaliy Bunechko reported on the ongoing work with a private investor who is seriously considering the issue of building an international airport in Zhytomyr as a public-private partnership.
“In order for the airport to work within the framework of the international airport, it is necessary to complete the construction of the runway. To complete it, we need UAH 360 million. What are we doing in this direction? A certain land plot has been transferred to the city. We are now very actively working with the private investor who is seriously considering the construction of the international airport within a public-private partnership. The idea is even to make a cargo hub here to unload Kyiv, the Zhuliany and Boryspil airports, to make a hub here to fly here and send cargo across Ukraine,” he said in an exclusive interview with Interfax-Ukraine.
Speaking about road construction, Bunechko said that since the beginning of his work as head of the regional administration in August 2019, he was skeptical about whether the Chinese contractors would be in due time with the construction of a ring road around Zhytomyr, since they violated all the deadlines.
“But the pace with which they are now making the road, and the kilometers of the road that are already there, all this gives hope and optimism,” he said.
Bunechko said that the region now has a new approach to regional roads, and not “patching up” roads.
“When I reported to the president about my first 100 days of work, I said that there would be 90 km of roads, he asked: “Are you going to build roads in 10 years?” We have a network of 7,000 km. He said that we need to look for opportunities. I want to say today it is 140 km of regional roads, which are already being repaired, despite all the obstacles that were in the antimonopoly committee. We have overcome them, we have completely tendered all our 53 highway points, all roads are being repaired. There are some roads that have already been completed, now they will be put into operation, it remains to obtain permits,” he said.
The governor said that the most critical sections of roads were selected throughout Zhytomyr region, and soon everyone will feel that the roads are being built.

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The head of the office of the National Investment Council of Ukraine, Olha Mahaletska, predicts a decrease in the interest of potential investors in regional airports, according to the website of the council. “Previously, one of the most attractive areas for investment was infrastructure, namely, concession of airports, but after the pandemic the world will change, the focus of interest will change. I do not think that now regional airports will be considered by potential investors as one of the most interesting topics,” she notes.
According to Mahaletska, the council is already conducting the sector analysis to understand which areas may be attractive to investors in the post-pandemic period.
At the same time, the council said, with reference to professor at Georgetown University Anders Aslund, that after the COVID-19 pandemic, the Ukrainian economy will be in a slightly better position than the economy of the European Union: while the EU will lose about 10% of GDP in 2020, Ukraine will lose about 8%.
The head of the office said that the timely introduction by the Ukrainian government of a quarantine was a very correct decision, which helped contain the spread of the disease in the country.