Daily monitor

The Government of Ukraine drafted law which regulates the implementation of bilateral power contracts and the transition to the liberalized energy market. The Chairman of the National Energy Regulatory Commission (NERC), Mr Kalchenko, told the journalists yesterday. The transition to the new market model will be made in four stages, with more and more power consumers working under bilateral contracts in each stage of the transition. Mr Kalchenko noted that the law can be approved by the parliament in the next year which suggests the full transition to the new market by 2015.

The largest producer of passenger cars in Ukraine, the Zaporizhzhya Automobile Plant (ZAZ), intends to cut output by 61.2%, or by 157.6 thsd units, to 100 thsd units in 2010, compared with the Plant’s output level in 2008. The Company also announced that it intends to export more than 50 thsd cars, mainly to Russia, in 2010.

A new major player will appear on the sugar market. Gennady Bobov, co-owner of Terra Food (TM Tulchinka) and the owner of the ‘Panda’ agricultural holding, is purchasing the Zhashkiv Sugar Plant. Experts estimate the deal to be worth approximately USD 15 mln. The entrepreneur has announced that he plans to invest another USD 20 mln in implementing energy-saving technologies at the Plant over the next two to three years.

The Bogdan Automobile Plant [LUAZ UZ, U/R] recorded a net loss of UAH 322.611 mln (USD 39 mln) in 3Q09, while its net sales decreased by 66.73% to UAH 511.63 mln (USD 62 mln) in that period. According to a press release issued by the Company, in January-September 2009, LUAZ recorded a net loss of UAH 530.473 mln (USD 65 mln.), while net sales dropped by 83.13% to UAH 971.775 mln (USD 118 mln).

Next year, the agricultural company Sintal Agriculture [SNPS GF] plans to place its shares on either the Warsaw or London Stock Exchange. According to the Company’s management, the Company is not considering the option of raising debt financing. In October, Sintal completed a private placement of 17.2% of its ordinary shares on the Frankfurt Stock Exchange (Germany), during which it attracted USD 13 mln. Using the resources that were raised, the Company plans to seriously expand its infrastructure, in particular, its elevator capacity and the amount of irrigated land under cultivation.

As of October 23, Ukrainian agricultural enterprises had gathered 6 mln metric tons of sunflower seeds, 5.6 mln metric tons of corn, and 6.9 mln metric tons of sugar beet. Corn was harvested from an area of 1.2 mln ha (56% of the forecast). The crop yield for which is 4.67 metric tons per ha, whereas the yield rate was at 4.33 metric tons per ha in 2008. The corn crop is forecast at 10 mln metric tons. Farmers have already gathered sunflower from 3.9 mln ha, representing 94% of the forecast. Its yield in 2009 is averaging 15.4 centner per ha, in comparison to 2008’s 15.6 centner per ha. The sunflower crop is forecast at 6 mln metric tons.

On October 20 Sintal Agriculture [SNPS GF] finished a private placement of 17.2% of its ordinary shares on the Frankfurt SE, for which it raised USD 13 mln. At present, several other agricultural holdings are in the process of making placements. One of them is already public: Mriya [MAYA GR], one of major Ukrainian producers of wheat, sugar and sunflower oil.

In September, Landkom International [LKI LN] reported that it is carrying out negotiations with respect to a potential merger with other international agricultural operators. However, upon further consideration of the potential transaction and after consulting with majority shareholders, the Company decided to abandon the talks. Currently, Landkom International’s board decided to obtain financing from existing shareholders and new investors. In particular, the Company reported on the planned issuance of 195 mln ordinary shares at 5 pence per share in order to attract an additional GBP 9.75 mln (about USD 16 mln) in financing. The actual issuance will be done after the meeting of shareholders that is scheduled for November 18 or a date thereabouts.

ABN AMRO Bank N.V. and Raiffeisen Bank Aval have prolonged short-term loans that had been granted to the agricultural holding Astarta [AST PW], until March and July 2011, respectively. As of June 30, 2009, the Company’s total debt amounted to EUR 85.33 mln. This includes short-term debt, up to one year, at EUR 45.54 mln; and from one to two years at EUR 7.45 mln. The debt structure includes its four largest loans, denominated in USD, amounting to EUR 54.4 mln at a rate of Libor +1.25% to Libor + 5.5%, as well as a short-term loan for EUR 9.95 mln, in UAH, at 25% per annum.