Business news from Ukraine

IFC may provide MHP with $30 mln loan

The International Finance Corporation (IFC), a member of the World Bank Group, plans to resume cooperation with MHP, Ukraine’s largest chicken producer, and provide a loan of up to $30 million to its subsidiary Vinnytsia Poultry Farm LLC to finance the modernization and expansion of the plant’s biomethane production capacity from agricultural waste.

According to the IFC website, the corporation’s board of directors plans to consider this project at a meeting on September 19 this year.

It is noted that the company already operates two biogas plants to process manure from its farms into green energy. As part of its decarbonization strategy, MHP plans to increase biomethane production in Ukraine by modernizing and expanding the capacity of its biogas plants in several stages. The first stage, which will be financed under the project, will serve to demonstrate the viability of liquefied biomethane production.

The total cost of the project is estimated at $52 million, and in addition to the IFC loan, MHP expects to finance it with its own funds. It is also expected that the project will be supported by a $15 million guarantee from the European Fund for Sustainable Development Plus, the UK, and other donors.

It is specified that the construction is planned at a biogas plant in the village of Vasylivka (Haisyn district, Vinnytsia region), which was launched in 2019 and is the largest such plant in Ukraine with a capacity of 12 MW.

At the first stage of the project, it is planned to modernize the existing facilities to produce 14 thousand tons of liquefied biomethane per year, and at the second stage – to expand the capacity to 20.5 MW.

IFC specifies that if approved by the board of directors, this will be the corporation’s sixth investment in MHP since 2003, the last of which was opened in 2014 and closed in 2019.

The corporation also points out that since 2018, members of local communities, with the support of a number of environmental organizations, have complained about the investments of IFC and the European Bank for Reconstruction and Development to the CAO (Compliance Advisor Ombudsman). As noted in the CAO’s materials, despite the efforts of all parties, no final solution was found.

In February 2022, the CAO published its final report and referred the case to the Compliance Department. After the case was suspended in Ukraine in March 2022 due to the full-scale war against Ukraine launched by Russia, the CAO resumed its work on the case on October 17 after consultations with stakeholders.

MHP is the largest chicken producer in Ukraine. It also produces grain, sunflower oil, and processed meat products. MHP supplies chilled chicken half-carcasses to the European market, which are processed, in particular, at its facilities in the Netherlands and Slovakia. In February 2019, the holding completed the acquisition of the Slovenian company Perutnina Ptuj.

The founder, majority shareholder and chairman of the board of MHP is Ukrainian businessman Yuriy Kosyuk.

In the first quarter of 2023, MHP’s revenue increased by 34.7% compared to the first quarter of 2022 to $745.60 million, and net profit amounted to $49.07 million against a net loss of $108.25 million (with a foreign exchange gain of $4.18 million against a foreign exchange loss of $95.32 million).

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Varus received almost UAH 300 mln loan

State-owned Oschadbank has provided a UAH 297 million revolving credit line to Omega LLC, the owner of the Varus supermarket chain, under the state program “Affordable Loans 5-7-9%,” the bank said in a statement on Friday.

“This is the fourth retail chain to receive financing from Oschad in the period from February 2022 to May 2023,” the release said.

According to the release, since the beginning of the full-scale invasion, the state bank has entered into loan agreements for grocery retail in the corporate business segment for UAH 1.6 billion, thus increasing the volume of financing for this sector by almost 3.5 times.

It is noted that Oschadbank has been cooperating with the VARUS network since 2014. The credit line was opened to replenish working capital for a period of 12 months.

As the state bank recalled, in 2022, Oschad entered into loan agreements with large corporate clients worth almost UAH 14 billion, while the corresponding loan portfolio increased by 24% and amounted to UAH 56.6 billion at the beginning of 2023. It is noted that since the beginning of this year, the volume of loan agreements has reached UAH 14.7 billion.

Omega LLC was established in 2000, the beneficiaries are Valeriy Kiptyk and Ruslan Shostak. The first Varus supermarket was opened in 2003 in Dnipro. According to the website, the chain currently has 103 supermarkets in five regions of Ukraine and the capital, with a retail area of 89.4 thousand square meters. Varus employs seven thousand people.

According to the National Bank of Ukraine, as of July 1, 2023, Oschadbank ranked 2nd in terms of assets (UAH 324.74 billion) among 65 banks operating in the country, and first in terms of the number of branches in the country (1183).


Ukraine’s state budget has received $1.5 bln loan guaranteed by Japan

Ukraine’s state budget on Thursday received a $1.5 billion concessional loan through the World Bank’s Trust Fund mechanism under guarantees from the Japanese government, the Finance Ministry said.

“The raised funding will be used to restore the economy and strengthen social protection of the population,” the release quoted Finance Minister Serhiy Marchenko as saying, thanking the WB and Japan for the allocation of funds.

The Finance Ministry recalled that since the beginning of Russia’s full-scale invasion, Ukraine has received more than $581 million in concessional financing from the Japanese government through the Japan International Development Agency (JICA).

“This year, the Japanese government is expected to provide another $2 billion in direct budget support through the World Bank Trust Fund,” the ministry added.

As previously indicated by the Ministry of Finance, as of July 21 this year, Ukraine’s state budget received funding from international partners in the amount of $23.6 billion, compared to $32.1 billion last year, with a need for this year of about $42 billion.

Since then, the budget has also received EUR1.5bn of the sixth tranche of EU macrofinancial aid.

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EBRD provides Kredobank with EUR25mn guarantee and EUR25mn loan

The European Bank for Reconstruction and Development (EBRD), with partial support from the European Union, is providing Ukraine’s Kredobank with a EUR25m guarantee to cover the risks of new lending, as well as a EUR25m Trade Facilitation Program (TFP) loan for trade finance to Ukrainian clients.

“The new risk-sharing agreement will allow Credobank to reduce the funding gap, and continued access to financing will help companies to remove bottlenecks in trade in food and agricultural products,” – quoted in the message on Wednesday the words of the EBRD Managing Director in the sector of financial institutions Francis Malizh.

It is noted that the new financing will be available to companies operating in such critical sectors as primary agriculture and agricultural services, food processing, transportation and logistics, retail and pharmaceuticals.

Under the risk-sharing agreement, which the two institutions with prior cooperation experience signed on Wednesday in London, the EBRD is providing a EUR25m unfunded risk-sharing instrument that covers 50% of the credit risk on Kredobank’s new financing totaling EUR100m, but not more than 50% of the portfolio. The EBRD guarantee is provided in two equal tranches.

In addition, EUR15m of the total EUR100m portfolio covered by the guarantee will be available to finance long-term investments by micro, small and medium-sized enterprises (MSMEs) in technologies and equipment meeting EU standards, including investments in sustainable and green technologies under the EU Eastern Partnership SME Competitiveness Program (EaP SMEC), the EBRD said.

He added that participation in the EaP SMEC program will also allow Kredobank and its clients to receive expert assistance in the form of training and advisory support. Eligible borrowers will also receive grant support in the form of investment incentives upon completion of their investment projects.

The EBRD guarantee is backed by a 50% first-loss coverage guarantee financed by donors as part of the sustainability package. The conclusion of this new agreement increases to EUR468 million the total amount of funding supported by such guarantees since the beginning of the war.

As for the EUR25mn under the Trade Facilitation Program, the lender notes that participation in this program will allow Kredobank to increase its support to Ukrainian exporters and importers.

Kredobank is one of the leading banks in western Ukraine and as of the beginning of June it ranks 14th (UAH 46.85 bln) out of 65 operating banks in Ukraine in terms of assets. Kredobank is fully owned by PKO Bank Polski SA, the largest systemically important bank in Poland, whose shares are listed on the Warsaw Stock Exchange.

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Ukraine to receive $1.5bn loan from WB under Japanese government guarantees, Ukrainian Prime Minister Denys Shmygal has said

Ukraine will receive a $1.5 billion loan from the World Bank (WB) under the guarantees of the Japanese government, Ukrainian Prime Minister Denis Shmygal said.

“Only the relevant agreement was signed by the World Bank and the Ministry of Finance during our meeting with World Bank Vice President Antonella Bassani,” Shmygal wrote in Telegram on Thursday.

According to him, the funds are envisaged to strengthen social protection, help people during the war and restore the economy.

The head of the Ukrainian government said that in total, the WB group together with partners mobilized $34 billion to help Ukraine, of which more than $22 billion has already entered the budget.

“We are especially grateful for PEACE in Ukraine, the largest investment project in the Bank’s history, which helps finance social payments and pensions. We appreciate our close cooperation and look forward to further joint projects for the reconstruction and development of Ukraine,” Shmygal wrote.


“Ukrgasbank” granted UAH 170 mln loan to OMZ Karpaty

State-owned “Ukrgasbank” provided “Karpaty” Experimental Mechanical Plant (OMZ) wagon building enterprise (Lviv region) with a two-year loan to the amount of UAH 170 mln, including UAH 60 mln granted under the state program “Available loans 5-7-9%”, as press-service of the bank informed.
According to a press release on Monday, such support from Ukrgasbank allowed the company to provide itself with orders, maintain its staff (more than 600 employees) and stable tax revenues to the budget.
“Since the beginning of the war, Ukrgasbank continues to support the national railcar industry by providing financing for the working capital of OMZ Karpaty LLC,” the statement said.
According to the bank, since the beginning of 2023, OMZ Karpaty has built 392 cars, including 291 grain cars, 35 gondola cars, 64 cement cars and two platforms. The company is also developing a new direction – repair of diesel locomotives.
Besides, the production is diversified in the direction of press-compactors production, which are exported to the EU.
The main activities of OMZ Karpaty LLC are construction of freight cars, repair of rolling stock, production of tank containers, tanks, metal structures and hydraulic elevators.
According to the resource opendatabot, in 2022 the company’s income increased by 2.9 times against 2021, to 1 billion 231.5 million UAH, net profit was 13.4 million UAH against a loss of 2.67 million UAH a year earlier.
According to the NBU on May 1, 2023, Ukrgasbank with assets of UAH 164.38 billion ranked 5th among the 65 operating banks in the country.

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