Ukraine cheers investments from IKEA, Saudi Arabia's SALIC
(Adds quote, details, background)
By Matthias Williams and Natalia Zinets
Sept 12 (Reuters) - Ukrainian investment announcements by
Swedish furniture retailer IKEA and the Saudi Agricultural and
Livestock Investment Company (SALIC) are votes of confidence in
the country's business climate, President Petro Poroshenko said
Ukraine is battling to shake off an image of entrenched
corruption that has long deterred foreign investors and held up
the disbursement of billions of dollars worth of aid from the
International Monetary Fund.
The announcements came as the Kiev authorities are trying to
negotiate further loans with a visiting IMF delegation this
month, needed to keep the economy on a stable footing and
spending in check ahead of elections next year.
SALIC announced the purchase of Ukraine's Mriya, one of
Ukraine's biggest farming companies which had defaulted on debts
of $1.1 billion in 2014, a default which according to its
current management was caused by fraudulent business practices.
Debt restructuring was completed last month.
"The decision by SALIC to acquire "Mriya Agro holding" is
really an extremely important event and demonstrates the
willingness of foreign investors to invest in Ukraine,
fundamental changes in the investment climate and the attitude
of investors to our country," Poroshenko said.
The cost or terms of the purchase were not disclosed, but
Poroshenko said it ran into hundreds of millions of dollars.
For SALIC, the purchase is a significant scaling up of its
presence in Ukraine, one of the world's biggest producers and
exporters of cereals and oilseeds. A SALIC subsidiary already
operates 45,000 hectares in Ukraine, with another 150,000
hectares coming from Mriya.
"Creditors and management succeeded not only in restoring
the company's operations after default, but also completed this
unprecedented billion-dollar debt restructuring, making Mriya an
attractive investment," said Oleksiy Pavlenko, Chairman of the
board of directors of Mriya Farming PLC.
"Ukraine's institutions also demonstrated their ability to
protect the rights of foreign investors."
An IKEA executive earlier announced the company would open
its first store in Ukraine next year, citing an improved
investment climate. The announcement follows the
entry of low-cost carrier Ryanair into Ukraine in March
after initially walking away from the deal in 2017.
Corruption and a lack of trust in the court system remain
the biggest obstacles to foreign investment in Ukraine, a report
by the local investment company Dragon Capital said on Tuesday.
(Editing by Jason Neely and Mark Potter)
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