22 Aug 2023 17:41

Kernel looks to raise up to $60 mln from shareholders by Sept 4 with new share issue

MOSCOW. Aug 22 (Interfax) - Ukrainian agricultural holding Kernel, which currently has a market capitalization of about $270 million, plans to launch a share offering for qualified investors - the company's shareholders - to raise up to $60 million, Ukrainian media quoted Kernel as saying in a statement.

Raising additional capital from shareholders is necessary to comply with the terms of ongoing negotiations with a pool of creditors and meet the company's financial needs, given logistical problems with exports and the destruction of some of the infrastructure.

"The number of shares and the issue price will be determined during book building, organized according to Dutch auction rules, given the restrictions arising from the company's authorized capital," the company said.

The company intends to use placement proceeds primarily to reduce debt, as required by its creditors.

Currently, there are 84,032,230 shares outstanding, the latest deals in the holding's shares were done at PLN 13.1 or $3.2 per share.

According to the prospectus, bids will be accepted until the evening of August 28. Participants must pay a deposit by August 31, and the placement closes on September 4. If bids amount to less than $50 million, the board of directors may cancel the placement.

Kernel is negotiating with creditors to extend the term of waivers for another year through June 30, 2024. At the moment, the process of agreeing the extension with most creditors is still ongoing.

Previous waiver letters had been signed in relation to Natixis PXF, ING PXF, EBRD and EIB loans in order to maintain stability and preserve the business and its assets for the period up to June 3, 2023, The agricultural holding achieved deferment of any repayment of the principal amount of the debt but still paid interest.

As of July 31, Kernel had $1.445 billion in interest-bearing debt - bank loan principal and Eurobonds, excluding accrued interest and leasing obligations - as well as $1.148 billion in cash and equivalents and $327 million of commodity reserves, including 1.282 million tonnes of grain, 103,000 tonnes of oilseeds, 147,000 tonnes of sunflower oil and 111,000 tonnes of sunflower meal.

A significant portion of the accumulated liquidity will be spent in fiscal year 2024 [begins July 1, 2023] to replenish working capital, capital expenditures for the development of an alternative export route across the Danube, repair of damaged facilities, completion of construction and commissioning of an oil extraction plant in western Ukraine, as well as to close a maintenance backlog as a result of liquidity preservation measures taken in fiscal 2022-2023, the report said.

Kernel is a major producer and exporter of sunflower oil. In addition, it is engaged in the cultivation and sales of agricultural products.

The largest co-owner of Kernel is Ukrainian businessman Andrey Verevsky via Namsen Ltd. This year, Verevsky, as part of the buyout and delisting of the agricultural holding from the Warsaw Stock Exchange, increased his stake in the holding from 41.3% to 74.05%.