Western minority shareholders in Kernel are mounting a legal challenge against a move by a Ukrainian oligarch to delist the nation's largest producer and exporter of sunflower oil from the
Minority investors from
Verevskyi’s investment vehicle
However, institutional investors from
“Kernel is trying to extort minority shareholders by offering to buy them out a price that significantly undervalues the company,” a European investor told bne Intellinews. “It’s part of an overall debasement of corporate governance.”
Kernel is a major supplier of agricultural products from the
Before the invasion,
Management also detailed its frustrations with its listing on the
Kernel also maintains that the stock suffers from a “lack of financial visibility and poor analyst coverage”, while low liquidity prevents investors from selling “in a fast and predictable fashion, especially with the war-related risks.”
A leading Scandinavian investor suggested Kernel is trying to use the conflict with
“At a time where
Kernel shares traded at PLN18.16 (€3.96) on Wednesday, compared with the buyout offer at PLN18.5. Its shares peaked above PLN86 in 2011 and traded at around PLN60 before Russia’s invasion started.
One European shareholder said he would be happy to take PLN40 per share, whereas some Polish investors are holding out for PLN100.
“The stock is trading at a massive discount to its peers like
Investors complained of a lack of communication by Kernel since the invasion started and the closure of an e-mail account dedicated to investor relations. One shareholder also questioned the wisdom of why the company had maintained a large cash position in cryptocurrency.
Polish minority shareholders in Kernel have called for an EGM to discuss the delisting of Kernel's shares from the
A letter published on the exchange's website on
Polish investors say the delisting will force some minority shareholders to sell shares under the offer owing to the legal inability of the funds to invest its assets in shares of private [non-public] companies.
“Pension funds will not be able to retain the company's shares in their portfolio after the termination of their circulation on the organised market," the letter’s authors said.
For its part, Kernel claims that these provisions of Polish law do not apply, since its holding company is registered in Luxembourg and is regulated by Luxembourg laws, and a decision by the board of directors is sufficient for delisting.
"The interpretation of Polish legislation on delisting issues, including in the shareholders' letter, is not true and misleads other shareholders of the company," said Kernel.
The company also argues that Polish investors are no longer Kernel's core base shareholders. It said: “After an IPO, up to 80% of company’s free float was composed of Polish investors, stemming from the successful pension reform in
Verevskiy, 48, started trading in grain when he just 19 and founded Kernel a decade later growing it into
After the country’s Orange Revolution in 2005, he became a parliamentary deputy belonging to the Yulia Tymoshenko faction. When the political winds blew in a different direction, Verevskiy switched his allegiance to a faction loyal to then President Viktor Yanukovych’s Party of the Regions, which was backed by the Kremlin.
Namsen said a failed bid to raise emergency equity funding in September faced “huge resistance” from minority shareholders, who showed “no interest” in the company’s longer-term prospects.
The board of directors unanimously supported the delisting, but some shareholders questioned the impartiality of its two independent directors.
Kernel’s listing in 2007 came amid a push to encourage Ukrainian firms to the Polish exchange. Its initial public offering (IPO) and three subsequent share issues between 2008 and 2011 raised a total of PLN1.2bn zloty (
The row reignites the debate over
Kernel turned to the
The EBRD says its investments “are combined with support for policies that promote the fight against corruption, good governance of state-owned enterprises, structural reforms and a more transparent business environment.”
Kernel’s press service did not respond to a request for comment.
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