By KYIV. Sept 4 (Interfax-Ukraine) – Agricultural holding Kernel announced the placement of 216 million shares among shareholders-qualified investors at a price of $0.2777, while now there are 84.031 million shares in circulation, and their price on the Warsaw Stock Exchange is PLN 11.02 (about $2.66 at the current exchange rate).
“The Offering raised gross proceeds of USD 59,983,200.02 from several qualified investors – existing shareholders of the Company participating in the auction… Allottees in the Offering will be acknowledged as shareholders of the Company in the share register of the Company on or around Monday, 4 September 2023,” the company said in a stock report last week.
The shares will be kept in the registered form and will not be admitted to trading on any stock exchange, Kernel said.
“The additional issue, as expected, turned out to be a big scam. It is 100 times cheaper than the company’s book value, 20 times cheaper than the annual profit and 11 times cheaper than the closing price today,” Pavlo Boiko, a well-known investor in Ukraine, the founder of Gonzo Invest, who earlier achieved a positive decision in the Ukrainian courts in a dispute over a squeeze-out at Metinvest’s Avdiyivka Coke and Chemical Plant, said.
“Further courts, media war and parallel negotiations,” he wrote in a specially created group for minority shareholders.
As reported, the price of Kernel shares on the Warsaw Stock Exchange on August 28, the last day for accepting applications for additional placement of shares in the amount of up to $60 million, fell by 6.38%, and a week after the announcement of the additional placement – by 20.2%. The current rate is a historic low since the company’s IPO in 2007, when the shares were sold to investors at PLN 24 per share.
The price of PLN 11 corresponded to the company’s capitalization of about $224.5 million, while the placement price corresponded to the company’s valuation of $83.3 million.
The offering prospectus, in which Kernel allowed the sale of up to 216 million shares, along with other terms of the offer, aroused the suspicions of minority shareholders in an attempt by majority shareholder Andriy Verevsky to dilute their stake.
Boiko then sharply criticized the actions of Verevsky and called on minority shareholders to unite to counter the possible dilution of shares as a result of an additional issue with their subsequent forced buyout. However, on August 29, he announced that he had initiated negotiations with Verevsky, which should take place next week, and until that moment he had refused to take any sharp public and legal steps against Kernel.
As follows from the information in specially created communities, all applications of small investors for the purchase of shares of the additional issue were rejected, since only qualified investors participate in it. However, such private investors hope to use the fact of refusal in subsequent complaints against Kernel to financial regulators and courts.
As of July 31, Kernel had $1.445 billion of interest-bearing debt (the principal amount of bank loans and eurobonds, excluding accrued interest and leasing obligations), $1.148 billion of cash and cash equivalents and $327 million of inventory.
Agricultural holding Kernel before the war ranked first in the world in the production of sunflower oil (about 7% of world production) and its export (about 12%). It is one of the largest producers and sellers of bottled oil in Ukraine. In addition, he is engaged in the cultivation of agricultural products and their sale.
The largest co-owner of Kernel through Namsen Ltd. – Ukrainian businessman Andriy Verevsky, increased his share from 41.3% to 74.05% this year as part of the buyout and delisting of the agricultural holding from the Warsaw Stock Exchange: on May 12, 30.248 million shares were bought out of the announced Namsen 52.057 million at a price of PLN 18.5 per share (about $4.47 at the then exchange rate), which led to a total buyout price of about $136.1 million.
Another 7.86% of the shares are owned by the issuer himself.
The company is currently awaiting a verdict from the Polish regulator on the delisting application, which is opposed by a number of minority shareholders.
