Kernel Holdings, an agribusiness headquartered in Ukraine and with a listing on the Warsaw Stock Exchange, has hired ING and JP Morgan to arrange investor meetings in Europe and the U.S. from Thursday ahead of a potential debut five-year U.S. dollar deal, Reuters reports.
The company is likely to offer a healthy yield to entice investors, although a source familiar with the deal said it was too early to speculate what sort of level would be needed.
Read alsoUkraine presents to London court evidence of Russian pressure during receipt of "Yanukovych debt"With 95% of its Ebitda and revenues in hard currency and kept offshore, Kernel is rated above the sovereign - two notches by Fitch, at B+, and one notch by Standard & Poor's, at B. Ukraine has a Sep 2022 bond trading at 8.11%, according to Thomson Reuters data.
"Kernel intends to improve its debt structure by substituting its mostly short-term debt with a five-year benchmark Eurobond issue and/or new three-year pre-export financing facilities," said Fitch, which has the company on rating watch positive.
"As a result, post-refinancing most of Kernel's current debt (approximately $600 million as of January 2017) would carry maturities of between three and five years and there will be sufficient, long-dated extra resources to cover working capital peaks."
The company has made strong progress since the end of its fiscal year in 2014 when it announced a net loss of $98.3 million. In it last fiscal year, which ended on June 30, the company made a net profit of $225.2 million. It made an operating profit before working capital changes of $330.5 million.
Read alsoUkraine harvests record high yield of sunflower seedsIts credit metrics are also healthy, with net debt to adjusted Ebitda of just 0.3x at the end of the last fiscal year. That compares with 2x as of June 30 2014.
The deal is likely to generate plenty of interest given the lack of high-yield issuance from CEEMEA, and the dearth of deals from Ukraine in particular. The last bond from a Ukrainian corporate that wasn't a part of a debt restructuring came in June 2013, when Ukrlandfarming tapped a Mar 2018 bond for $75 million.
The last benchmark was from Ukrainian Railways in May 2013, which raised $500 million through May 2018.