Eurodon’s non-core asset sale draws PIK Group, parent to raise up to EUR 100m in medium term – CEO (Financial Times-The Mergermarket Group)
26.01.2017
Eurodon’s non-core asset sale draws PIK Group, parent to raise up to EUR 100m in medium term – CEO   PIK Group [MCX:PIKK; LSE:PIK], a Russian real estate developer, may bid for agri group Eurodon’s construction subsidiaries Irdon and Metall-Don, CEO and majority owner of Eurodon Vadim Vaneev said. Both Irdon and Metall-Don were put up for sale last year, as reported.   Apart from PIK Group, Eurodon is in talks with other potential suitors from the construction industry and its home Rostov region, Vaneev said. Eurodon also wants to hear from new suitors and expects to finalize the sale of the subsidiaries by summer 2017, he said.   Residential real estate developer Irdon posted RUB 576m (EUR 9m) in 2015 revenues.   Construction materials maker Metall-Don owns four plants and has a revenue of RUB 2bn (EUR 32m), Vaneev said without providing its valuation.   The proceeds from the sale will allow Eurodon to repay part of the debt owed to the local state-run lender Vnesheconombank (VEB), a person familiar with Eurodon said. VEB owns a 40% stake in Eurodon and holds the collateral of the group’s entities, the person added. VEB has provided a RUB 18bn (EUR 283m) credit facility to fund the majority of the group’s agricultural projects since mid-2000s, the person familiar said. Eurodon also lists state-backed lender, Rosselkhozbank, among its debt providers, company data reads.   Vaneev declined to comment on the company’s debt load.   A spokesperson for VEB confirmed the plan to sell Eurodon’s distressed non-core subsidiaries by end-1Q17.   Fundraising strategy   In the medium term, once Eurodon divests Irdon and Metall-Don, it will hire financial and legal advisors to spearhead the new fundraise needed to further expand its turkey production business, Vaneev said.   Eurodon is currently drafting its development strategy and wants to hear from outside investors ready to bring in up to EUR 100m in equity funding, Vaneev said without specifying the precise stake size in the new entity that could be offered.   The group will use the new funding to further expand its facilities in the Rostov region and build new facilities close to Moscow and either in Volga region or in Urals, Vaneev said without specifying the exact timeline for the expansion plan.   Given Eurodon's debt load, attracting EUR 100m in outside equity funding seems to be an ambitious goal, a sector banker said. The success of the fundraise will depend on the stake size that would be offered to an outside investor in the project, the banker said.   Eurodon will post around RUB 9bn (EUR 143m) in 2016 revenues, up from RUB 4.8bn (EUR 76m) recorded in 2015, Vaneev said. It hopes to double its revenues to RUB 18bn (EUR 286m) in 2017 as it has completed the construction phase of a new turkey production project, he said.   Eurodon’s competition includes Damate and Cherkizovo [MCX:GCHE; LON:CHE], Vaneev said.   by Sergey Kolyada in Moscow