Kernel to Invest $120M, EIB to Grant $519M

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The agriholding Kernel intends to invest $120M in 2019-2020 to construct a new grain terminal (LLC TransGrainTerminal) in the sea port Chornomorsk. This was reported by the holding company Kernel Holding SA (Luxemburg) at Warsaw Stock Exchange.
As per the release, the company’s capital investments are going to reach $540M by 2021, $100M of which have been laid out by mid 2018. “In the framework of development strategy till 2021 Kernel contrives to erect an oilseeds processing facility in West Ukraine costing $180M. Its launching in operation is scheduled to early 2021”, said the release. Besides that, the company plans to invest $150M in modernisation of oil extraction plants, $65 in silos, and $25M in purchase of railcars in 2019-2020.
Along with the mentioned, Kernel is going to assign $66M to the current construction of export terminal in Chornomorsk Port in 2019 finance year (FY, July 2018 – June 2019). “On the whole our capex in 2019 will amount to $329M”, indicated Kernel’s Chairman of Directors Board Andrii Verevskyi. They will assign $62M for agri machinery, $42M for the oilseed extraction plant in West Ukraine, $41M for silos, and $7 to acquire railcars.
According to Mr Verevskyi, the company plans financing the investments on account of the funds from earlier emitted bonds, operational cash flows, and credit lines. No more bonds emission is planned.
The company schedules launching of the 4M t second grain terminal in Chornomorsk (TransGrainTerminal) in 2019.
In April 2017 Ukrainian Sea Ports Authority (USPA) and Kernel signed a memorandum of co-operation by which USPA undertook to enlarge depths of the Sukhoi Liman first basin operational harbourage, those at Berths 14-17 and the port’s access canal, while Kernel – to expand cargo handling in the port from 3M t up to 7M t by the second half of 2019.
European Investment Bank (EIB) may grant the agri group Kernel long-term funding up to 250M USD to cover capex for 2019 FY. The project is at the assessment stage, informs Interfax-Ukraina referring to the EIB release.
“The project embraces funding construction of two grain storage silos, grain processing and storage terminal in Chornomorsk Port, five power and heating plants, and a sunflower seeds crushing facility”, reported the bank. As per EIB, the project’s total cost would reach up to 519M USD.
“It is anticipated that the EIB funds would enable the company to enhance its trade and transport logistics by building new grain storages available for third parties as well, and transhipment objects. Thanks to construction of a new sunflower oil producing plant… the company should boost its resources use efficiency and increase its share in the market of Ukraine and the EU”, stressed the financial institution.
Kernel is a world major manufacturer and exporter of sunflower oil, leading in the release and delivery of agriproducts from the Black Sea to world markets. The company’s vertically integrated structure is based on closely linked with each other business segments: production, export and domestic sales of sunflower seed; horticulture; grains export; rendering grain storage and transhipment services at elevators and port terminals. Its land bank comprehends 550,000 hectares. The enterprise owns the grain complex TransBulkTerminal in the port of Chornomorsk capable of annual 4M t, and exports the products to more than 60 countries.
The stock of the group Kernel Holding S.A is quoted at Warsaw Stock Exchange since November 2007. Its largest stockholder via Namsen ltd is Andrii Verevskyi who enlarged in October – December 2017 his stock from 38.13% up to 39.47% (32.344M shares); Cascade Investment Fund (Cayman Islands) whose beneficiary is Vitalii Khomutynnyk owns 6.59% of Kernel’s shares.
In FY 2018 the group reduced grain sales by 8.2% comparing to the previous FY i.e. down to 4.646M t. Sales of bulk sunflower oil raised by 20.1% — up to 1.301M t, of bottled sunflower oil – decreased down by 9.7% to 118.6M ltr; grain throughput at the company’s export terminals shrank by 0.6% or to 6.06M t.
Accordingly, in FY 2018 the group decreased its net profit 3.2 times as compares to FY 2017 i.e. to $55.95M. The revenue grew by 10.8% — to $2.403Bn, while EBITDA shrank by 30.3% or to $222.5M.
International Rating Agency Standard & Poors (S&P) has endorsed the long-term credit rating of Kernel Holding S. A. (Luxemburg) at B level, as reported Interfax-Ukraina, and according to S&P press release the forecast for the rating is ‘stable’.
Moreover, the corresponding rating level is asserted to Eurobonds of Kernel Holding for $500M to be retired in January 2022.