Kernel considers Eurobond placement

Kernel Group (WSE: KER PW) plans to raise debt via its first Eurobond placement by the end of September, Interfax reported yesterday citing an unnamed source. Ruslan Patlavskyy: We see a strong likelihood of Kernel’s successfully making a Eurobond placement given its strong market share (estimated 24% of domestic sunseed crushing capacities and ca. 10% of Ukraine’s grains exports in 2009) and solid financial performance. According to the company’s fiscal 2010 financials, the group’s EBITDA gained 0.3% yoy to USD 191 mln (EBITDA margin: 18.7%, +0.5 pp yoy), while its EBITDA interest coverage was 8.4x and net debt-to-EBITDA was 1.5x. Given these results, we estimate the potential placement volume at USD 200-250 mln, which corresponds to a fully manageable forecasted net debt-to-EBITDA ratio of 1.9x for fiscal 2011E.