IFC mulls USD 50 mln loan to MHP

The International Finance Corporation’s board plans to vote on May 14 on providing up to USD 50 mln in loans and a partial credit guarantee to lease agricultural machinery of up to USD 18 mln to Myronivsky Hliboproduct (AIM: MHPC LI), the IFC reported yesterday on its website. Loan proceeds would be used for expansion of its grain growing business. Ruslan Patlavskyy: We see a high likelihood of the IFC approving the new loan to MHP, given its strong operating results (2009 EBITDA: 38% vs. 8% average among global peers), strong market position (43% in 2009 domestic poultry output and ca. 25% in consumption) as well as its transparent and vertically integrated business model. We estimate that the increase in MHP’s land bank by another 115 ths ha to 300 ths should require USD 35-40m in CapEx (assuming USD 300-350 per ha of acquired land lease rights), which makes the IFC loan fully sufficient to cover this project. Based on MHP’s current debt/EBITDA 2.5x covenant, the company should be able to expand its total debt (USD 519 mln) by another USD 100 mln in addition to the USD 50 mln from IFC to support its aggressive CapEx plans.