Kernel secures USD 65 mln credit facility for working capital

Ukraine’s largest sunflower oil producer and leading grain trader Kernel (KER PW) agreed upon a USD 65 mln credit facility with a syndicate of European banks, the company reported on June 17. The one-year secured credit line will be used for working capital purposes in Kernel’s farming segment.

Roman Topolyuk: Having obtained a new trade finance facility, Kernel remains among the few Ukrainian borrowers capable of raising new debt in the current environment, in which capital markets are almost closed altogether. As of end-March, Kernel owed USD 70 mln maturing in June 2015. So the new credit line will effectively replace most of the “older” facility. The company also held three facilities worth USD 58 mln, maturing from April to June, which we estimate might be fully retired. Thus, Kernel is on course to deleveraging. We estimate the company will report net debt of USD 425 mln as of end-June, down from USD 482 mln as of March. We reiterate our BUY recommendation for KER PW.