Business news from Ukraine

SWEDISH COMPANIES INTERESTED IN INVESTING IN UKRAINIAN IT SECTOR – MINISTER

KYIV. June 14 (Interfax-Ukraine) – Sweden’s Minister for Enterprise and Innovation Mikael Damberg has said that Swedish companies are interested in investing in the IT sector in Ukraine.

“If you look at the IT sector in Ukraine – well-educated young people bring innovations to Ukraine. Many Swedish companies consider investing in Ukraine, in the IT sector in Ukraine,” the minister said during the Swedish-Ukrainian business forum in Kyiv on Monday.

He also spoke about the intensification of cooperation in this area between the two countries’ companies.

According to Damberg, Ukraine should use the advantages that it has, in particular its well-educated employees.

MRIYA OKAYS $15.2 MLN INVESTMENT PLAN FOR Q2

KYIV. June 14 (Interfax-Ukraine) – Mriya Agro Holding has approved a plan of investment for the second half of 2016 in the amount of $15.2 million, subject to replenishing its working capital, the company said in a statement.

“Specifically, the company intends to allocate $12.5 million for purchase of machinery and equipment including leasing operations and $2.7 million for support and official registration of the land bank,” the statement reads.

The total sum of investments planned for 2016 is $17.2 million.

According to the company’s plan and sufficient availability of working capital, the management expects the value of this year’s harvest to be $114.4 million based on the current forecast of market price. The operating cash flow for May-December 2016 is estimated at $15.9 million.

“However, due to the ongoing negotiations on restructuring of the company’s debt portfolio, the issue of future replenishment of working capital remains open. If the working capital is restricted to the currently available amount of the working capital facility, Mriya’s management forecasts that this will have a negative impact on revenues and operating margin up to $7 million for the season,” the statement reads.

Under this scenario, the investment period will be postponed until late 2016 and the investment projects will be scaled down to $10 million, which will have a negative impact on the results for the 2016-2017 season, the company said.

Mriya Agro Holding has already invested $2 million into the purchase of new equipment since the beginning of 2016. Specifically, the company has purchased John Deere 7930 tractors and Challenger8186 No-till sowing machines. Mriya has also made all mandatory investments in logistics and elevators and is ready for the harvest.

As was reported, Mriya Agro Holding is in talks on easing the debt burden from $1.3 billion to an acceptable level, which, according to creditors’ estimates, is about $300 million.

The remaining part of the debt will be converted into capital. The company hopes to complete the restructuring until the end of 2016.

As reported, Mriya in August 2014 reported on an overdue payment of about $9 million of interest income and about $120 million on its liabilities. The aggregate debt of the holding to all financial creditors, taking into account guarantees provided to entities related to the Huta family, at the time of defaulting was about $1.3 billion

In January 2015, creditors took operational control and elected new managers.

STATE ROAD FUND COULD BE LAUNCHED FROM 2017 IF RELEVANT BILLS SUBMITTED TO RADA BEFORE JULY 16

KYIV. June 14 (Interfax-Ukraine) – The State Road Fund could be launched from January 1, 2017 if relevant bills are submitted to the Verkhovna Rada before July 16, 2016.

An Interfax-Ukraine journalist reported that Chairman of the parliamentary transport committee Yaroslav Dubnevych gave the information at a meeting in the Infrastructure Ministry on Monday.

“It is especially important to collect all proposals for the bills in short terms and register them no later than July 16 – before the current session ends. We can receive the conclusions of profile ministries in the first days of September and put on the agenda of the parliament. This would enable the Road Fund to start functioning from January 1, 2017. The reform that transfers local roads to management of regional administrations jointly with financing foreseen in the fund would also begin functioning,” Dubnevych said.

Infrastructure Minister Volodymyr Omelyan said that the required documents have been drawn up.

“We have drafted several bills: the bill on the creation of the Road Fund, bills on decentralization of Ukravtodor. We have drawn up some cabinet resolutions and legislative initiatives on the introduction of the tolling system – a fee collected from trucks which weight exceeds 12 tonnes. A resolution introducing FIDIC control has been crafted and two bills regarding the weight control have been submitted to parliament,” the minister said.

He said that there is an initiative to make fines for over-weight trucks one of the sources of replenishing the Road Fund and the budget of Ukrtransbezpeka.

The ministry has submitted a proposal to impose large fines that meet the European level to parliament.

“We want to fine not only the hauler, but also the company that orders the services and freighters. The fine is UAH 17,000, but the bill has not yet been voted,” the minister said.

USDA REVISES UPWARDS UKRAINE’S SUNFLOWER OIL OUTPUT, EXPORTS FORECAST FOR 2016/17 AGRI-YEAR

KYIV. June 14 (Interfax-Ukraine) – The U.S. Department of Agriculture (USDA) has revised its forecast for sunflower oil production in 2016/17 agricultural year (September-August) upwards by 7.6%, to 5.372 million tonnes compared to its May forecast.

The USDA said on its website that the forecast of the yield of sunflower seeds in Ukraine was revised upwards by 1 million tonnes, to 13 million tonnes.

The forecast for sunflower oil exports was revised upwards by 6.7%, to 4.8 million tonnes, oil cake – by 9.8%, to 4.5 million tonnes. Oil cake production could reach 5.31 million tonnes.

Ukraine is the world’s leader in production and exports of sunflower oil.

SPDI DEVELOPER SELLING LOGISTICS TERMINAL IN BROVARY FOR $16 MLN

KYIV. June 13 (Interfax-Ukraine) – Secure Property Development & Investment Plc (SPDI, earlier Aisi Realty Public Limited, Cyprus) seeks to sell Terminal Brovary logistics complex (Kyiv region) for $16 million.

“SPDI is pleased to announce that it has signed heads of terms with Temania Enterprises Ltd. for the sale of its Kiev based warehouse, Terminal Brovary, at a Gross Asset Value exceeding $16 million,” the company said on the website of the London Stock Exchange (LSE) on Thursday.

According to the report, SPDI has also signed a fixed four-year lease agreement with a subsidiary of the buyer raising the warehouse occupancy rate to 100%, thus generating around $150,000 of Net Operating Income (NOI) per month until the sale is concluded.

“The rent attributed to the buyer received prior to the disposal will be deducted from the purchase price, if such disposal is concluded by the end of October 2016,” the company said.

The sale of Terminal Brovary is subject to a number of conditions, including reaching agreement on terms with the lending bank (the European Bank for Reconstruction and Development, EBRD) with regards to the related debt attached to Terminal Brovary, which may take some time to be effected.

According to a posting on the company’s website, construction of class A warehouse Terminal Brovary was finished in Q2 2010. Its gross area is 48,900 square meters. It is located 10 km away from Kyiv city border and 15 km away from the Boryspil international airport.

As of June 9, 2016, 72% of space in the warehouse has been leased.

LOZOVA MACHINERY SEEKS TO DOUBLE SALES IN 2016

KYIV. June 13 (Interfax-Ukraine) – Lozova Machinery (the brand of tillage machines made by UPEC Group’s enterprises, Kharkiv region) seeks to double sales in 2016, to over UAH 300 million (in 2015 sales exceeded UAH 170 million), Vice-President for Marketing and Sales at UPEC Roman Girshfeld has told Interfax-Ukraine.

“Today, in the conditions of the decline of prices on commodity markets, the application of advanced agricultural technologies and effective use of resources is important. One of the solutions is energy efficient machinery made by Lozova Machinery,” he said.

Girshfeld said that in January through May 2016 Lozova Machinery sales on the Ukrainian market doubled year-over-year, and quadrupled on the Eastern European and Baltic markets.

“We cooperate with more than 30 foreign dealers. Our sales and the number of dealers are stably growing, including thanks to display of innovative machines at exhibitions and the Day of Field,” he said.

The press service of UPEC said that at Agro 2016 held in Kyiv from June 8 to June 11 Ducat disk harrows were exhibited in two options.

“Ducat disk harrows allow reducing fuel consumption by over 30% and achieving 1.5 times more efficiency compared to traditional disk harrows thanks to application of spring tines and HARP Bearing Agro Units,” the press service said, citing Girshfeld.

He said that the company seeks to expand the range of disk harrows and cultivators and present heavy spike harrow on the Day of Field on July 21.

The group also starts testing machinery for precise cultivation that would allow combining several tillage operations and save 50% and more fertilizers, he said.

A Harvester trailer which production would start in H2 2016 under a joint project with Britain’s Larrington Trailers is exhibited at Agro 2016.