Agro-industrial company Creative Group, which belongs to Stanislav Berezkin, soon can change the owner. Probably, only the oil business is going to be sold. Investment banker, three market players and the manager of the consulting company explained the variants of the offer. Creative Group is put up for sale because of the debts. Experts consider Karnel company which belongs to Andrey Verevskiy, and Leonid Yurushev, the businessman, to be among the claimant upon the assets.
Why Stanislav Berezkin has decided to sale the assets, and finally who can buy this perspective business?
The first quarter of 2015 company ended with a net loss equal to 4,5 bln UAH with a gross profit of 158 mln UAH, which is 81% less compared to the first quarter of 2014. The main beneficiary of the company is Stanislav Berezkin.
Leverage
"The key motive of selling the part of Creative Group business can be the cutting of leverage. As at March of 2015 the debt of the company was equal to $605 mln. – This data was cited in financial disclosure system of securities and stock market national commission. And the net debt was equal to $578 mln. “Consequently, the leverage index was 5,7x, which is definitely higher than the comfortable level of 2,0 x” – said Ivan Dzvinka, the analyst of Eavex Capital investment company.
“ High leverage in the stable economy of the developed countries is not an essential problem for the companies of the real sector, however they are also keeping debts under observation. In Ukraine, with its political and economic problems, the high index of leverage creates one of the biggest risks for the business” – explains Alex Lissitsa, the head of Ukrainian agribusiness club association.
Dzvinka elaborates that market multiplier, of the Creativ Group public company currently is equal to 3,5x. If apprising Creativ according to this multiplier, its valuation will be equal to $360 mln. Which means that with the current net debt of $578mln, selling the business is going to provide an additional payment on the behalf of the shareholders, equal to $200 mln, to the new owner. And symbolic agreement of “sale for $1” would be perfect (and unreal at the same time) scenario for the current owners of Creative Group, on the condition of selling the whole business” – he says.
Two market players, who asked not to be cited to, reported that Creative Group probably is not going to sell its soya and hog-producing lines. “Given that the shareholders are going to keep the soya and hog-producing segments, the best-case scenario would be selling the part of business of the group with the simultaneous remission of the exact part of the debt” – thinks Dzvinka.
Mysterious buyer
Top manager of the consulting company, on condition of anonymity, said that earlier Creative negotiated with Kernel company, which is the leader of the industry. “As far as I know, they negotiated with Kernel for a long time, but it appears that it had no results. Seeing of the fair valuation of the Creative business differentiates on the part of the buyer and seller” – he tells. But Kernel company denied the acquisition of Creative.
Representatives of the company announced that Creative Group can`t comment the request of editorial office and present the official position later.
Two top managers of agrisector reported that the deal hasn`t been closed yet and businessman Leonid Yurushev, ex-owner of the Forum bank and the huge developer-owner of Yaroslavov Val company, could become the buyer. However, respondent experts doubt the fact, that the person, who has no connection to agribusiness, can buy these assets. Investment analysts are careful with their calculations, but in the context of M&A inactivity in agribusiness they suggest that a whole new player is going to enter the market.
“Demand on Ukrainian distressed assets and companies, which are on sale with the discount in Ukraine hadn`t changed. On one side it is owners, who didn`t manage with the control over their debt holding and who are ready to sell with a discount, to keep the entirety of the business. On the other side, the separate category of investors is open to this kind of assets” – tells Alexey Oleynikov, the managing partner of Inventure Investment Group.
According to Alexey Oleynokov, the main kind of investors, who are able to buy distressed assets in Ukraine: a) inside strategic investors, who have financial liquidity due to the export orientation of their business, or those who managed to realize the capital after the sale of their other assets; b) speculative investors, who have the capital, obtained by sneak paths; c) international investors in the name of institutional funds of direct investments, who in spite of inactivity during last 7 years, consider the purchase of distressed assets with a discount; d) few strategic foreign investors, who are searching for primary assets and cheap factors of manufacturing in Ukraine. Probably, in the perspective you can find one more type of investors in Ukraine – Chinese investors, who will be interested in assets in the agricultural complex of Ukraine.
At the end of the day, analysts noticed that oil business could interest a non-core investor with an easy access on the European market and perspective positions on the Ukrainian market. However, according to Alex Lissitsa, the business of Creative can become effective only on the condition of leverage minimization.
Creative Group – is one of the biggest converters of agriproduct in Ukraine, which is engaged in production of fats and margarines, sunflower oil and oil meal, pellets and also in agriculture – crop farming and cattle breeding. The company belongs to top-3 Ukrainian converters of sunflower seeds. The Group has 9 plants, 8 elevator complexes, crop farming business, and also a pig-breeding farm.
