Business news from Ukraine

EBRD BUYS ONE-FIFTH OF EUROBONDS ISSUED BY NAFTOGAZ FOR EUR 600 MLN

The European Bank for Reconstruction and Development (EBRD) has acquired one-fifth (for EUR 120 million) of five-year eurobonds issued by Naftogaz in the amount of EUR 600 million, the bank has said.
“The eurobond proceeds are issued for general corporate purposes including the financing of gas purchases. The bank’s financing will be used exclusively for gas purchases. The transaction will contribute to Ukraine’s energy security, ensuring procurement of natural gas for the upcoming 2019/2020 winter heating season in the country,” the bank said on its website.
As reported, on July 12 Naftogaz Ukrainy placed two tranches of eurobonds denominated in euros and U.S. dollars: EUR 600 million for five years at 7.125% and $335 million at 7.375% per annum for three years. The anchor investors of the issue were the EBRD and a number of U.S. investors. The initial benchmark yield of dollar eurobonds was about 7.75%, eurobonds in euros about 7.5%.
Earlier, Naftogaz announced the need to urgently raise funds for the accumulation of increased volume of gas in storage facilities for winter – 20 billion cubic meters to be ready for a possible termination of transit by Gazprom from January 1, 2020 and strengthen its position in negotiations with the Russian gas monopoly.

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EBRD PROVIDES EUR 149 MLN LOAN TO UKRAINE TO UPGRADE TRANSMISSION NETWORK

The European Bank for Reconstruction and Development (EBRD) will provide investment up to EUR 149 million to Ukrenergo National Energy Company to acquire up to 26 new transformers and carry out the automation and upgrade of 12 high-voltage substations. “The investment will help Ukrenergo upgrade its key transmission infrastructure required for the synchronization with the European electricity networks. It will also assist Ukraine in aligning its legal framework and operational practices with the EU Third Energy Package,” reads an EBRD press release.
According to the bank, Ukrenergo will use the 15-year sovereign-guaranteed loan to acquire up to 26 new transformers and carry out the automation and upgrade of 12 high-voltage substations in key locations of the Ukrainian transmission network. The loan will also contribute to the annual reduction of CO2 emissions by 20,500 tonnes.
Besides, the investment will strengthen Ukrenergo’s capacity to accommodate the growing share of renewables in the Ukrainian grid, with an increasing share of wind and solar power. “A flexible, smart grid will be key to the sustainable electricity sector of the future,” said the report.
The EBRD financing is also promoting the commercialization and institutional development of Ukrenergo through the implementation of a comprehensive Corporate Governance Action Plan and robust procurement standards.
As reported, the total cost of Ukrenergo modernization project is EUR 198.2 million, including EUR 49.2 million of own funds of Ukrenergo and EUR 149 million to be provided by the EBRD.
The EBRD is the largest international financial investor in Ukraine. Since the start of its operations in the country in 1993, the Bank has made a cumulative commitment of almost €13.6 billion through 432 projects in the country.

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EBRD COULD ISSUE $80 MLN TO KERNEL

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.

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EBRD TO PARTIALLY FINANCE CONSTRUCTION OF 100 MW DNEPRO-BUGSKY WIND FARM

The European Bank for Reconstruction and Development (EBRD) under EBRD’s Ukrainian Sustainable Energy Lending Facility III (USELF III), a EUR 250 million facility to support renewable energy in Ukraine, will partially finance construction of the Dnepro-Bugsky wind farm with a planned capacity of 110 MW located in Oleksandrivka (Kherson region).
The decision was made by the EBRD board on July 10, EBRD Senior Adviser External Affairs for Eastern Europe & Central Asia Usov told Interfax-Ukraine on Thursday.
EBRD said that Dnepro-Bugsky Wind Power Station LLC is the borrower of the funds. The borrower is ultimately fully owned by three sponsors, Akuo Energy SAS (France), Saffelberg Investment NV (Belgium) and Aeolus Invest NV (Belgium). The limited liability company is a special purpose vehicle incorporated in Ukraine for the purpose of developing, constructing and operating the project.
The total cost of the project is EUR 188.64 million. The possible share to be paid by the EBRD is not disclosed.
According to other materials of the project posted on the bank’s website, Dnepro-Bugsky wind farm will belong to Akuo Energy.
The project consists of 25 4.4 MW turbines on the Dniprovsko-Buzsky Lyman, which will be delivered by Nordex. Under the project it is planned to build a 150 kV power line to the Posad-Pokrovska substation of 27.3 km long with 194 pillars.

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FARMAK RAISES FIVE-YEAR LOAN FROM EBRD

PJSC Farmak pharmaceutical company (Kyiv) has raised a five-year loan from the European Bank for Reconstruction and Development (EBRD) in the amount of EUR 15 million (equivalent of UAH 427.838 million). An Interfax-Ukraine correspondent has reported that the loan agreement was signed between the bank and the pharmaceutical producer on Tuesday.
Farmak Executive Director Volodymyr Kostiuk said that the company has raised around EUR 72 million from the EBRD since 2006. “The EBRD is our strategic partner, we will continue working with it,” he said.
Kostiuk said that the attracted funds are intended to expand production at the Farmak’s facility in Kyiv.
“We want to develop and conquer new markets, but today we do not have enough production capacity, so the expansion of production is very important for us,” he said.
The borrowed funds will be sent, in particular, to finance the expansion of production facilities, and the construction of a new laboratory and production complex.

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AGRO-INDUSTRIAL GROUP SODRUGESTVO TO GET $10 MLN LOAN FROM EBRD

The European Bank for Reconstruction and Development (EBRD) will issue a $10 million loan to Sodrugestvo agro-industrial group, one of the world’s largest soybean processors. According to information on the bank’s website, the funds will be used to finance working capital for the group’s subsidiaries in Serbia and Ukraine.
In addition, the EBRD is organizing a $80 million loan to finance capital expenditures and working capital for a Sodrugestvo subsidiary in Turkey. It is expected that the EBRD will issue $55 million, and the rest of the loan ($25 million) will be syndicated. The cost of the entire project is estimated at $87.5 million. The funds will be used to partially finance the purchase of a production facility in Izmir (Turkey), upgrade the acquired object and finance working capital to expand activities in Turkey.
According to the bank, the financing will allow the company to expand the supplier base in Ukraine and Serbia and support the purchase of assets in Turkey.
Sodrugestvo Group was founded in 1994. It has headquarters in Luxembourg and over 30 enterprises in 20 countries. The company operates in the regions of Russia, the CIS, Scandinavia, Northern Europe, the Mediterranean region, the Middle East, Central and Latin America.

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