20 Feb 2024 18:21

Kernel proposes to cancel treasury shares, so Verevsky's share will reach 94%

MOSCOW. Feb 20 (Interfax) - Kernel, one of the largest Ukrainian agro-industrial groups, proposes to reduce the company's share capital by canceling 6.602 million shares (2.2% of its share capital) owned by its subsidiary Etrecom Investments Limited.

As Ukrainian media reported, citing Kernel's statement on the Warsaw Stock Exchange, the issue was submitted to an extraordinary meeting of shareholders on March 21.

If these plans are implemented, the number of shares will be reduced to 293,429,230, and the share capital to $7,748,290 million, the statement said.

The Kernel website says that, after the cancellation of treasury shares, the share of CEO Andrei Verevsky, through his company Namsen Limited, will increase from 92.3% to 94.37%.

The meeting notice reveals no reason for proposing the cancellation of treasury shares. However, Kernel minority shareholders suggest that the goal is for Verevsky to achieve a 95% stake, which will allow him to announce a forced buyout of shares.

As reported, Verevsky's Namsen, as part of a share buyback announced in March 2023 for the subsequent delisting of the agricultural holding from the Warsaw Stock Exchange, increased its stake from 41.3% to 74.05%.

During the additional placement initiated by Verevsky in August last year among qualified investor-shareholders, Namsen acquired another 212,634,916 shares with a total volume of additional placement of 216 million shares. The additional placement shares are kept in registered form and will not be admitted to trading on any stock exchange, Kernel said.

Subsequently, Namsen acquired another 1.2 million shares of the company in November, or 0.4% of the total, which, including treasury shares, increased Verevsky's stake to 94.37% of voting shares.

Minority shareholders announced plans to appeal against the additional placement of shares in the Luxembourg regulator, as well as in the courts. Private investor Pavel Boyko said that a group of investors is working with law firm Brucher, Thieltgen & Partners. Over one thousand investors from all over the world have united, "from the smallest to 1 million shares," Boyko said.

"The first lawsuit has already been filed on the illegality of Kernel's manipulations, statements and internal decisions on delisting. Now a second lawsuit is being prepared to cancel the additional issue, which quadrupled the number of shares," Boyko said in November.

Currently, Kernel's share price on the Warsaw Stock Exchange is 10.31 zloty ($2.57 at the current rate). Since the start of trading on Tuesday, it has increased 1.1%.

Kernel is one of the largest producers and exporters of sunflower oil in Ukraine, and is engaged in the cultivation and sale of agricultural products.

Kernel's net profit for the 2023 fiscal year was $299 million, while the holding completed the previous year with a net loss of $41 million. Revenue decreased 35% to $3.455 billion, but EBITDA increased 2.5-fold to $544 million.