Ukraine schedules Odesa Portside privatization for Dec. 14

The State Property Fund of Ukraine (SPF) announced on Oct. 30 the privatization tender of a 99.6% stake in nitrogen fertilizer producer Odesa Portside Plant will take place on Dec. 14. The deadline to submit documents by potential contenders is Dec. 6. As the SPF earlier announced, the starting price of the Odesa Portside stake will be UAH 5.16 bln (USD 202 mln, based on the current exchange rate).

Alexander Paraschiy: We do not believe there will be any public interest in the plant, given its unimpressive fundamentals. As the SPF head himself has acknowledged, the plant would be breakeven at natural gas costs of about USD 153/tcm, while in October its gas costs were about USD 270/tcm and they may reach USD 300/tcm in November. At such levels with steady prices for its key product of ammonia, the plant would generate over USD 40 mln in operating losses in 4Q16. Provided that ammonia prices don’t increase in 2017, the plant will remain loss-making. We doubt there is someone in the world who would be ready to pay a total of USD 590 mln (including debt and working capital investment needs) for such an asset.