State-owned enterprise (SOE) Ukrainian Sea Ports Authority and one of the largest Ukrainian agricultural groups Kernel have signed an agreement of cooperation, foreseeing investment of the group in the development of infrastructure of the Chornomorsk seaport in the amount of over UAH 3 billion.
According to the press service of the authority, under the agreement, by the end of 2020, the port plans to dredge near four berths and build a new grain terminal, which will increase transshipment to 6 million tonnes.
“The agreement between the Sea Ports Authority and Kernel is a good example of public private partnership and the next step in the systemic development of the port of Chornomorsk, which the authority is engaged in. This year we completed a large-scale main dredging project on the port’s approach canal and the water area of the first boot basin of the Sukhy estuary and we immediately proceed to the creation of the depths necessary for business at the berths No. 14-17. The Kernel company, for its part, has committed to guarantee the volume of cargo traffic of at least 6 million tonnes per year. This will contribute to a quick payback on capital investment of the authority,” the press service of the authority said, citing its head Raivis Veckagans.
He also added that the implementation of the project will help improve the conditions for the export of products of Ukrainian enterprises, increase ship calls and create about 250 new jobs in the port of Chornomorsk.
In turn, Kernel CEO Yevhen Osipov said that agribusiness is now the locomotive of the Ukrainian economy, so the company’s strategic goal by 2020 is to increase grain exports to 8.8 million tonnes via launching a new terminal in Chornomorsk.
According to the report, the volume of investments in the public private partnership project by the Ukrainian Sea Ports Authority will amount to almost UAH 230 million.
The European Bank for Reconstruction and Development (EBRD) could issue up to $80 million to Kernel, one of the largest Ukrainian agricultural groups, within the framework of a syndicated loan to finance working capital, which is associated with the procurement, storage, transportation and sale of grains for export.
According to the information on the bank’s website, the total cost of the project is $300 million (consists of the existing and increased working capital financing).
The decision on the project can be made on September 4, 2019. Now the project is at the concept review stage.
“The provision of up to $40 million in the form of participation in a syndicated senior secured revolving credit facility to finance working capital needs of Kernel Group. Working capital financing is associated with the procurement, storage, processing, transportation of oilseeds and vegetable oil products, and export sale,” the report on the website says.
The cost of the entire project is estimated at $390 million.
The project will be considered on September 4 of the current year. It is now at the study stage.
Kernel is the world’s largest producer and exporter of sunflower oil, a leading manufacturer and supplier of agricultural products from the Black Sea region.
Kernel, one of the largest Ukrainian agricultural groups, in the 2019 fiscal year (FY, July-June) increased sales of grain by 2.2 times compared with the previous FY, to 10.445 million tonnes. According to the company’s website, sales of sunflower oil increased by 15% compared to the same period of the previous fiscal year, to 1.6 million tonnes.
Sales of bottled oil during this period grew by 10% compared with the previous year and amounted to 131 million liters.
In the 2019 FY, the plants of the holding processed 3.2 million tonnes of oilseeds (sunflower and soybeans), which is almost the same as last year.
Grain exports from Ukraine over the year amounted to 6.1 million tonnes (58% more). Transshipment of grain at the export terminals of the agricultural holding in Ukraine in the 2019 FY rose by 12%, to 4.6 million tonnes, in the Russian Federation decreased by 28%, to 1.4 million tonnes.
Kernel, one of the largest Ukrainian agricultural groups, could consider a possibility of selling shares in a deep-water grain terminal at the Taman port (Russia) if the price offered for them were acceptable, the agricultural holding has said on the Warsaw Stock Exchange (WSE).
Several potential buyers are interested, and if the holding receives the satisfactory price, it will seriously consider the issue of leaving the Russian market, Kernel President Andriy Verevsky said.
As reported, in 2012, Kernel and Glencore acquired a 100% stake in the deep-water grain terminal in the port of Taman from the EFKO group. The transaction value was $265 million. Kernel received a 50% stake in this terminal. In 2018, Kernel transferred its quota for transshipment of 1.8 million tonnes of grain to a third party and received $7.8 million for this.
Kernel is the world’s largest producer and exporter of sunflower oil, a leading manufacturer and supplier of agricultural products from the Black Sea region to the world markets.
Kernel, one of the largest Ukrainian agricultural groups, received $164 million of net profit in the first half of the 2019 fiscal year (FY, July 2018-June 2019), which is 83% more than in the same period last year.
According to the company’s financial report on the website, its revenue in July-December 2019 FY increased by 2.1 times, $2.255 billion.
The operating profit of Kernel rose by 2.4 times, to $193.4 million, EBITDA by 1.9 times, to $229.9 million.
According to the company, the group’s revenue from oilseeds processing grew by 9%, to $736.5 million, from infrastructure segment and sales in July-December 2019 FY by 4.2 times, to $1.741 billion, from crop production by 22%, to $342.5 million.
According to the report, the company plans in the 2019 FY to process 3.1 million tonnes of sunflower and export 6-6.2 million tonnes of grain.
One of the largest Ukrainian agricultural groups Kernel has acquired 100% of shares in Rail Transit Kargo Ukraine (RTK-Ukraine) for $64 million, the company has reported on the Warsaw Stock Exchange (WSE).
According to the report, RTK-Ukraine is the owner of 2,949 grain railcars accounting for nearly 15% of the market and making it the second largest grain hopper wagon fleet operator in the country after the state monopoly Ukrzaliznytsia.
“The acquisition shall not only contribute an estimated incremental EBITDA of up to $20 million annually and protect the company against ever rising logistic costs, but it shall also procure the smooth and efficient flow of grains from inland silos to the ports as company’s export volumes increase following the commissioning of TransGrainTerminal in the port of Chornomorsk,” the company said.
Adjusted for working capital and net debt, the company paid $49 million in cash at completion while the remaining balance shall be released upon the achievement of certain conditions.
