Cabinet discloses decision to sell sunflower oil asset to Kernel owner

The Ukrainian Cabinet of Ministers made public on Feb. 23 a resolution allowing the supervisory board of the state owned Ukrgazbank to approve the sale of its ownership right in Ellada vegetable oil plant. The resultion was approved on Feb. 11.

Ellada plant was pledged by Creative holding under a USD 86 mln loan provided by Ukrgazbank. Creative holding, having over USD 600 mln in debt, is insolvent now. 

According to the information disclosed at the Cabinet meeting on Feb. 11, the ownership right in Ellada plant will be sold for USD 95.76 mln, which is equal to the total amount of Creative’s debt and accrued interest to Ukrgazbank. 50% of the payment will be made upfront, and the rest will be paid within next five years, according to the bank. The exact schedule of the payments was not disclosed. Ukrgazbank representatives also reported at a Cabinet meeting that the Central Bank approved the deal.

According to Ukrgazbank management, the buyer of the plant is named Grain Terminal, which is a part of Kernel group. WSE-listed holding Kernel (KER PW) does not consolidate any company with that name. According to media sources, Grain Terminal is owned by Andriy Verevskiy, a major shareholder of Kernel.  

At this stage, there is no information about whether the supervisory board of Ukrgazbank approved the sale.

Alexander Paraschiy: It seems like it’s not Kernel, but its main shareholder who is behind the deal. This is the reason why Kernel did not disclose anything of the possible acquisition of ownership rights in a large plant, which has a sunflower processing capacity equal to about a third of Kernel’s current capacity.

Verevskiy’s possible purchase of Ellada plant, therefore, won’t increase the value of Kernel. Kernel now has the opportunity to produce sunflower oil using the facilities at Ellada under a tolling scheme, regardless of who owns the plant.

As we wrote before, we consider the possible sale of Creative’s biggest asset to a third party as a negative development for the two biggest state banks, Oschadbank (OSCHAD) and Ukreximbank (EXIMUK) to whom Creative owes about USD 300 mln and about USD 100 mln, respectively.