OREANDA-NEWS. August 19, 2010. Creativ Group (UX: CRGR UK) plans to invest USD 34 mln in a new sunflower seed crushing plant with a total capacity of 330 ths mt of seeds per year, Yuriy Davydov, Creativ’s Chairman of the Board, told Interfax yesterday. The facility should operational by October 2011. Davydov also said Creative plans to launch a new 50 ths mt grain storage facility in the near future.

Concorde Capital: based on our estimates, Creativ operated at 70% of its 415 ths mt sunseed crushing capacity in 2009 while management expects to increase the load by 15 pp y-o-y to 85% in 2010E. The launch of an additional 330 ths mt facility will increase the group’s sunseed crushing capacity by 79.5% to 745 ths mt p.a., which corresponds to 8.3% of Ukraine’s total capacity. This said, we do not expect the company to reach full capacity in the next 2-3 years as current domestic sunseed crushing capacity, estimated at 9.0 mln mt, is approximately 30% above Ukraine’s sunflower seed harvest. Given the announced plans, we estimate Creativ’s net debt at USD 165 mln and USD 145 mln for 2010E and 2011E respectively, which corresponds to a net debt-to-EBITDA ratio of 2.5x and 1.6x for 2010E and 2011E, respectively, vs. 3.8x in 2009.