Daily monitor

The president’s clipping service announced that the Gross Domestic Product (GDP) of the Ukraine grew by 6.1% from January-May 2010 as compared to the period of January-May 2009.

Ukrzernoprom Agro/MCB Agricole [4GW1 GR, BUY] has started harvesting campaign on farms in the Crimean and Odessan regions. According to the company’s forecast, the total yield of early crops is expected to be 195 thsd tonnes. In particular, the wheat harvest is projected to be 110 thsd tonnes; rapeseed, 27 thsd tonnes; winter barley, 24 thsd tonnes; spring barley, 16 thsd tonnes; winter rye, 8 thsd tonnes; mustard, 4.5 thsd tonnes; peas, 4 thsd tonnes; and soybeans, 1 thsd tonnes.

A.Verevsky, the Chairman of Kernel Holdings [KER PW, HOLD] has decreased his interest in Kernel by 9.42%, from 50.65% to 41.23%, through the selling of 6.9 mln ordinary shares of Kernel in connection with a derivative transaction with a London based bank. The official purpose of the transaction is the continuation of Mr. Verevsky’s personal financial diversification. He states that it will not affect his management responsibilities at the company, and his chairmanship of Kernel will remain his main activity for the foreseeable future. To confirm this statement he has voluntarily locked-up further disposals of shares in Kernel for a period of 18 months.

The Ukrainian Stock Exchange reported an 8.5% decrease in the Ukrnafta’s oil price at the next oil auction, which is to take place on June 22.

Bohdan Corporation (represented in the Ukrainian fund market via its production department – [LUAZ UZ, U/R]) reported about UAH 400 mln (USD 50 mln) Crimean tender for the award of trolleybuses. Bohdan and the Council of Ministers of Crimea signed a memorandum, which assumes the Company to produce trolleybuses in the City of Simferopol, Crimea. The Crimean Prime minister reported that the bus plant took part in the tender, as well as Belkomunmash and Lvivskiy bus plant. According to the Prime minister, the project would be financed via bonds issuing.

Sumy Frunze Machine Building [SMASH UZ, BUY], one of the leading machine-building complexes in Ukraine engaged in manufacturing equipment for oil and gas production, intends to supply Russian Lukoil five gas-pumping units between the end of 2009 and the beginning of 2010. Aggregates of 16 MW each will be installed at the Nahodkinskiy oil and gas field.

According to a press release published in a regional newspaper of Mariupol City, Illichevec, shareholders of Mariupol Illich ISW at its AGM—which will take place on July 1—will vote on a 3.7-fold increase in the statutory fund of the Company. This item was added to the AGM agenda. If the vote passes, an additional 9.02 bln shares (par value UAH 0.25) will be issued and the statutory fund would increase by UAH 2.255 bln to UAH 3.092 bln. The number of shares following the issue would reach 12.372 bln. The Company plans to use raised money to increase working capital and further development.

According to Interfax, IUD-owned steelmaker Dzerzhinka [DMKD UK] on June 14 stopped its rolling-mill equipment, due to a suspension of natural gas supply to the Company.

Kernel Holding [KER PW, HOLD], a major Ukrainian sunflower oil and grain exporter, has announced that it will purchase 99.2% stake in Kirovohradoliya from Allseeds. Kirovohradoliya holds the most valuable assets of the Group and produces almost 80% of Allseeds’ total output. Formally, the buyer is Kernel Capital LLC. In June, Kernel entered into an option agreements with Allseeds’ minority shareholders for the purchase of 56% of Allseeds at USD 42 mln, and in February, for another 37.6% at USD 18 mln (according to our estimations).