14 January 2023

In the company's message on the website of the Warsaw Stock Exchange, it is noted that Kernel has reached an agreement with some creditors regarding the extension of its debt until June 30, 2023.

Among the mentioned creditors are such organizations as EBRD, ING and others. The extension refers to the principal of the loan, while Kernel will continue to pay interest on the debt.

As a reminder as of September 30, 2022, the total amount of Kernel debt (excluding land lease obligations) amounted to about $1.5 billion, of which $595 million were bonds, the other part were short-term loans taken mainly for financing of working capital needs in the 2021/22 season.

Because of the beginning of the large-scale russian invasion in February 2022, the export of Ukrainian agricultural products through Ukrainian Black Sea ports stopped until August, so Kernel was unable to export the commodity stocks formed at the beginning of the invasion. Accordingly, the company needed to iextend the loads financing these stocks, so the process of corresponding restructuring was launched in the first half of the year.

Since the opening of the grain corridors in August, we estimate that Kernel's grain and sunflower oil exports have increased significantly, so the company is generating sufficient operating cash flow to partially repay its loans. Also, today the profitability of grain and oilseed exports significantly exceeds the pre-invasion level. So good financial results of the company can be expected as well.

These are our estimates, for a more accurate understanding of the situation, it is necessary to wait for the company's operating and financial report for October-December (which should be published in January-February 2023).