Kernel Holding held a conference call with investors

24 January 2017

In frames of Eurobonds issue roadshow on January 23 management of Kernel held a conference call with potential investors and creditors.

During the call CEO of the group Mr. Andrey Verevskiy confirmed that proceeds from Eurobonds issue will be mainly utilized to refinance existing credit facilities and extend average maturity of the debt.

In case of successful placement and debt maturity extention, Kernel will concentrate its efforts on realization of investment program. Update on the program (source of financing is to be operating cash flow generated by the company), its estimated costs and probability of realization in short-term perspective are as follows:

  • Expansion of grains port terminal capacity in Chernomorsk (Ukraine) from 4M tons up to 8M tons (investment budget USD 120M, thereof USD 40M to be spent in Y2017), project is on the way now.
  • Purchase of oilseeds crusher(s) with 1-1.5M tons capacity (estimated cost is up to USD 200M, which is higher vs. our previous estimate of up to USD 150M). In a view of low margins (as crushing capacities in Ukraine (18.5M tons) are higher vs. raw materials availability (record-high sunflower seeds crop in Ukraine in current season made 13.6M tons)), Kernel expects industry consolidation, though notes that at the moment crushers owners are rather unwilling to sell their assets, so there is uncertainty related to this investment.
  • Increase of land bank by 200k ha (estimated cost USD 150M, generally in line with our estimations). It was disclosed that Kernel is interesting in purchase of Mriya assets (though negotiations are on their initial stage). In general, taking into account good yields and margins of Ukrainian farmers in this season, current prices of farming companies are quite high, which slows down process of Kernel expansion on this side as well.

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