Page 68 - UKRRptDec18

9.2 Major corporate news 9.2.1 Oil & gas corporate news
DTEK Naftogaz, a privately held company, plans to increase its natural gas production by 10-12% next year , to 1.8bn cubic meters, Yulia Borzhemskaya, the company’s regulatory manager, told an energy forum in Kyiv.
The old game of selling gas to factories at household rates still costs Naftogaz about $350mn a year , Andriy Kobolyev, the company CEO, said Tuesday at conference organized in Kyiv by Nobles Fortune, the consulting company. Although abuses have largely ended, middlemen companies still manage to sell 1-2bn cubic meters of subsidized ‘household’ gas every year to companies, the Kyiv Post reports. So far, the Rada rejects legislation to make public the names of companies buying cheap gas from the intermediaries.
9.2.3 Transport corporate news
Fitch Ratings has upgraded the long-term foreign and local currency issuer default rating for Ukrainian Railway to B- from CCC with a stable outlook, the agency reported on November 1. The agency attributed its upgrade to “indefinite removal of unrestructured local debt from cross-default provisions” of the company’s Eurobond, which occurred last year. The agency sees that any potential default of Ukrainian Railway “could to some extent influence the cost of external funds for future debt financing” of the government and other state-controlled companies. The agency concludes that the company’s rating can be equalized to the sovereign one. As a positive development for the company, Fitch sees its deleveraging with its net debt-to-EBITDA ratio having declined to 1.4x in 2017 from 1.7x in 2016 and 2.1x in 2015, according to the agency’s estimates. At the same time, Fitch analysts see a risk of “activation of cross-default provisions with already restructured debt after expiration of the carve-out consent” in the end of 1H19. If the company’s “attempt to restructure this debt leads to an impairment of creditors' original rights,” Fitch will likely treat such exchange as distressed, the agency highlighted.
9.2.4 Construction & Real estate corporate news
9.2.6 Agriculture corporate news
Dragon Capital continues its commercial real estate purchases, paying $6mn for the former headquarters of Fortuna Bank, at 35B Borychiv Tik Street in Kyiv’s Podil district. In an auction of the bankrupt bank’s assets, bidding started at $4.5mn for the 4,000 square meter, seven story building. The auction was conducted by Deposit Guarantee Fund. Dragon’s co-investors on previous purchases have been Goldman Sachs and George Soros.
Saudi Arabia’s SALIC has completed its purchase of Mriya group`s Ukrainian farming assets . The sales price was not made public. After completion of the harvest, Mriya and SALIC’s Continental Farmers Group will integrate the two companies, with Mriya’s Simon Cherniavsky as CEO and
68 UKRAINE Country Report December 2018
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