Agro Perspectiva

Kernel Group purchasing Allseeds Group

15.02.2010 12:47 "Agro Perspectiva" (Kyiv) — As of this year Feb 12, Kernel Group (one of biggest Ukrainian fat-and-oil market operators) has signed option for 37.6% shares purchasing from Allseeds Group minority shareholders Viacheslav Petrishche and Cornelius Vrins in addition to earlier signed (as of this year Jan 13) option for shares controlling block purchasing from its competitor Allseeds Group. «Up to signed agreements, Allseeds Group cost (i.e. all shares and net financial debt market cost) totals about US$230 mn,» says Kernel report made on Warsaw Stalk Exchange. As to report, final amount to be paid should be recalculated on basis of Allseeds Group Mar 31/10 financial report (confirmed by independent auditor/compiled up to IFRS requirements). Report also says both options agreements will be fulfilled after Kernel gets Ukrainian Antimonopoly Committee approval. In this transaction, ING Bank N. V. was Kernel financial advisor; Allseeds Group minority shareholders have chosen investment company Dragon Capital (Kyiv) as advisor. As to Kernel quarterly report (published last Mon), signed agreements cover 93.4% Allseeds shares. However, Allseeds minority shareholders say agreements cover all 100% Allseeds shares. Besides, report says Ukrainian fat-and-oil market consolidation process (which started in 2006 when Kernel had purchased Eurotek Group productive assets) is, upon whole, already completed after Kernel having acquired Allseeds shares. «We expect significant synergy from Kernel integration into our financial operations and EBITDA indicator growth, — over US$45 mn annually since 2011 fiscal year (which starts Jul 01/10),» says in its report one of companies quotable on Warsaw Stalk Exchange. Kernel admits newly purchased 2 oil extracting plants (MEZ), earlier owned by Allseeds, with total annual processing capacity 565,000 MT seeds in Kirovograd region and Myckolayiv region will be good addition to Kernel MEZ already functioning in Kharkiv region. It is to be mentioned, Kernel Group also owns grain storage facilities totaling 600,000 MT (situated mostly in Ukrainian main grain regions, where Kernel plans to continue developing its business). Kernel also says it will be able, thanks to Allseeds integration, to export about 800,000 MT vegetable oils since 2011 fiscal year; Kernel thinks newly purchased vegetable oils transshipment port terminal (500,000 MT total annual capacity), earlier owned by Allseeds, in Myckolayiv region will be substantial support to assure expected export rates. As earlier reported, Jan 13/10 Kernel had signed option agreement for Allseeds Group shares controlling block purchasing for US$42 mn (taking into account Allseeds Group total cost is US$222 mn). However, Jan 18/10 Allseeds Group minority shareholders Viacheslav Petrishche and Cornelius Vrins (both owning about 39% shares) declared they retained priority right to purchase shares from Allseeds Group other shareholders. Kernel offered them to buy out their shares block at same price per 1 share at which Kernel had already bought shares controlling block from majority shareholder; after that sides started negotiating. Reportedly, Ukrainian Antimonopoly Committee has already received application from Kernel Holding S. A. requesting permission to get control over CJSC Grain Trade Company Allseeds-Ukraine (belonging to Allseeds Group). Kernel Group is vertically integrated national company working in Ukrainian agroindustrial sector since 1994. Company activity includes sunoil output, bottled sunoil domestic market distribution, sunoil/grains export and grains/oil crops elevators storage services; also, company produces agrarian products. Kernel Group integrates Poltavskiy Oil Extracting Plant (MEZ), Prykolotnianskiy MEZ, Vovchanskiy MEZ, over 20 elevators, trade company Kernel-Trade, securities market company Kernel Capital and Inerco (representing Kernel Group interests on foreign markets). Kernel Group trade marks are Shchedriy Dar, Stozhar, Chumak Domashnia, Chumak Zolota and Liubonka. In Jul-Dec 2009 Kernel Group raised its net profit to US$82.34 mn, up 30.4% against Jul-Dec 2008 (though company income shortened to $512.52 mn, down 22.6% against Jul-Dec 2008). As of Feb 15/10, UAH official exchange rate is UAH8,0025/US$1.