22 May 2024 18:31

Ukraine intends to sell PJSC UMCC for nearly $100 mln, former LSR plants for $25 mln in 2024

MOSCOW. May 22 (Interfax) - The State Property Fund of Ukraine (SPFU) has completed preparing the list of large-scale privatization objects for 2024, Ukrainian media reported, citing Vitaly Koval, SPFU head, whose interview was broadcast on social media on Wednesday.

Koval said that the most valuable assets in the list include PJSC United Mining and Chemical Company (UMCC), which produces titanium raw materials, at a starting price of UAH 3.7-3.9 billion [around $93-$98 million at the current exchange rate]; as well as the Aeroc company with several production sites, a former leader on the domestic aerated concrete market, at a starting price of around UAH 1 billion, or $25 million.

There are also plans to sell 66.65% of Kiev-located Ocean Plaza Shopping Center at a starting price of UAH 1.63 billion, and Hotel Ukraine at a starting price of UAH 1.8 billion.

Koval said that seven different business groups that were previously interested in UMCC are verbally confirming their current interest in purchasing the PJSC.

"Large privatization is when an asset costs more than UAH 200-250 million at book value or starting price. Today, the official list has been approved, and all objects for large privatization must undergo an approval procedure with the Cabinet of Ministers to be included in the list and transferred to an auction commission regulated by the minister, who approves the information on the terms and conditions of the auction," Koval said.

"The task that we have from the Finance Ministry is [to raise] UAH 4 billion [from privatization for the federal budget in 2024], though I am certain that we should exceed it. The ambitious price is substantially higher," he said.

Koval also talked about the matter of leasing federal land, namely that SPFU expects to raise UAH 1 billion during the first round of the relevant auctions, with the first auctions scheduled for the end of June, for which SPFU has already prepared 109,000 hectares of federal land.

"We have 386,000 hectares under the fund's management. There are 800,000 hectares overall of federal land today, namely that most of it, nearly half, is under the fund's management," he said.

Koval said that a lot with a cadastral number will be auctioned, and absolutely everyone, including individuals, farms, and agricultural holdings, are eligible to participate in the bidding, "so that everyone can come in, from a farmer on the neighboring plot to institutional investors". They may enter into a lease agreement for 14 years for the purpose of growing annual crops and for 25 years for producing perennial crops. The government envisages indexation of the value of federal land during the lease period, as linked to a normative evaluation.

UMCC launched actual activities as a state-owned enterprise in August 2014, when the Ukrainian government decided to transfer to its management the property complexes of Volnogorsk Mining and Metallurgical Plant and Irshansk Mining and Processing Plant, which were leased from the enterprises of Dmitry Firtash.

UMCC previously sold products to more than 30 countries and held 4% of the global market share for titanium raw materials.

The Anti-Corruption Supreme Court of Ukraine last summer expropriated 100% of the corporate rights in Aeroc LLC, previously part of the LSR Group , on behalf of federal revenue.

Ukraine in May 2023 imposed sanctions against AEROC Investment Deutschland GmbH, whose Ukrainian assets, Aeroc LLC's aerated concrete plants, had been seized in June 2022.

The official exchange rate as on May 22, 2024, is UAH 39.81 /$1.