Investors pump $400m into Ukraine farming groups

Agrimoney | 1 April 2011

Investors have backed hopes for Ukraine agriculture with a near-$400m cash injection, pouring $140m into an acquisition warchest raised by Kernel Holding, and $250m to support expansion plans at farm operator Mriya Agro.

Kernel, the silos-to-sunflowers group which yesterday announced the issue of about 5m new shares to bankroll ambitious takeover plans, said that it had in fact sold 5.4m shares, raising 399.4m zloty ($140m).

The placement price of 74 zloty per share represented a 1 zloty discount to Wednesday's closing price.

However, it was significantly above levels as low as 68 zloty to which the shares fell after the stock issue was announced.

The shares, which are traded in Warsaw, rebounded 5.3% to 74.75 zloty in morning trade on Friday.

'Aggressive expansion'

The announcement came as Mriya Agro, an unlisted group which farms more than 200,000 hectares in Ukraine, revealed the closure of its first issue of eurobonds, for $250m, which has been in train since last year.

Mykola Huta, the Mriya chief executive, said that the cash "opens new opportunities" for the grains-to- sugar beet grower, enabling it "to expand operating activity, optimise financial costs and strengthen our competitive advantages".

Fitch Rating analysts two weeks ago said that the cash would "fund aggressive expansion... across the value chain in the promising Ukrainian agricultural sector".

Fitch analyst Pablo Mazzini said: "The outlook for Ukrainian agriculture is positive, given the low base of comparative production yields and high prevailing commodity prices.

"This means private companies such as Mriya are favourably placed to take advantage of the environment."

'International reputation'

The bond issue, which was last week raised from $200m, was more than twice covered, and purchased in the main by European investors, Mriya said.

 US buyers picked up some $55m of the five-year bonds, which carry a fix coupon of 10.95%, with about $25m going to Asian investors.

"We think our first issue of eurobonds was successful," Mr Huta said.

"High interest for our eurobonds... improves our reputation in international capital markets".

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