Ferrexpo to be recapitalized by $100 million: half of the sum invested by Kernel owner Verevskyi

Shareholders of the iron ore company Ferrexpo approved an additional issue of shares of approximately $100 million. About $50 million is being invested by Kernel agribusiness owner Andriy Verevskyi, and roughly $40 million by Fevamotinico S.a.r.l., affiliated with Kostyantyn Zhevago, which is currently the group's largest shareholder with a stake of 49,27%.

As Dilo writes, this was reported by "Interfax-Ukraine."

The decision was approved by between 99,57% and 99,72% of shareholders.

The meeting authorized the directors to place the shares at a price of 16,5 pence each, which is 42,3% below the market price on the London Stock Exchange on 30 April. After the transaction is completed, the owner of Kernel will hold 21,44% of the enlarged share capital.

Ferrexpo's share price on the exchanges has fallen since trading began on 21 September by 1,29% — to 27,452 pence, corresponding to a market capitalization of $223 million. The new shares were admitted to trading from 22 September.

Why the company needed the money

It was previously reported that for at least the past six months Ferrexpo had been teetering on the brink of shutdown. Net cash position fell from $47 million at the start of the year to $21 million at the end of June, and on 5 August the company temporarily halted production, warning that available funds would only last until mid-September. The attracted $100 million close this gap.

"This deal solves the liquidity problem. For the past six months Ferrexpo was on the verge of stopping due to a lack of working capital," said Oleksandr Parashchiy, head of the analytical department at Concorde Capital.

Analysts note that the raised resources will be sufficient for about 18 months of operation. However, experts stress that the deal only buys temporary time and does not solve fundamental problems.

"This deal does not solve any structural problems. It gives the company a temporary interval," emphasizes Denys Sakva, senior analyst at Dragon Capital.

Control of the company remains with Zhevago: his stake through Fevamotinico will decrease from approximately 49% to 45%.

Recall that on 5 August the iron ore company Ferrexpo, whose main assets are in Ukraine, decided to temporarily suspend production of iron ore products. The main reasons were the ongoing threat of Russian attacks on port infrastructure and the need to preserve working capital.