Kernel confirms its bid for Ellada sunflower oil plant

Ukrainian grain trader and sunflower oil producer Kernel (KER PW) confirmed in talks with us on Feb. 24 that a company named Grain Terminal is its asset and it falls within the perimeter of consolidation of Kernel. According to a report from Ukrgazbank management at a Cabinet of Ministers meeting on Feb. 11, Grain Terminal was the only bidder with a USD 95.76 mln bid for corporate rights to the Ellada sunflower oil plant. The rights to the plant were pledged by Creative group under a USD 86 mln loan from the bank. Ellada, with a sunflower processing capacity of about 1 mmt p.a., is the core asset of Creative group which is now insolvent. On Feb. 11, the Cabinet ruled to allow Ukrgazbank’s supervisory board to approve the sale of the corporate rights in Ellada to Grain Terminal.

Alexander Paraschiy: Yesterday, we supposed that it could have been Kernel’s owner, not Kernel, who was bidding for the plant, as Grain Terminal hadn’t been disclosed among Kernel’s primary subsidiaries. It also drew our attention that Kernel was silent about the possible deal over the last two weeks even after information on it became public. Although confirming to us its ownership of Grain Terminal yesterday, Kernel refused to comment on other details of a possible deal. That means the deal, which requires the approval of the Ukrgazbank board and then Ukraine’s central bank, is not yet done. We continue to believe that the deal, if it happens, would be a bargain for Kernel, bringing about USD 110 mln in additional value to the company, and the discounted costs of the deal would be about USD 82 mln.