Ukrainian Government Launches Largest Privatisation Programme in 20 years

CMS Cameron McKenna, 
Kyiv, Ukraine, Thu, May 21, 2015

On 12 May 2015 the UkrainianGovernment announced that over 300 stated-owned companies are to be privatisedin 2015. The companies and assets on the list represent various sectors of theUkrainian economy, including energy, mining, agriculture, transport, chemicalsand construction.  Included in the listare the following companies:

·        a 78.29%stake in Centerenergo Public Joint Stock Company (“PJSC”), one of the majorpower generating companies;

·        variousregional power distribution companies, including a 60.248% stake inZaporizhzhiaoblenergo Open Joint Stock Company (“OJSC”), a 70% stake inMykolaivoblenergo PJSC, a 65.001% stake in Kharkivoblenergo Joint StockCompany, and a 50.999% stake in Ternopiloblenergo OJSC;

·        variouscombined heat and power generating companies (“CHP”), including a 100% stake inMykolaivska CHP PJSC, a 99.99% stake in Odeska CHP PJSC and a 99.833% stake inKhersonska CHP PJSC;

·        KyivPasservice State Enterprise which operates the Kyiv Central Bus Station and anumber of bus stations in Kyiv and in the Kyiv region;

·        a 50% stakein Azovmash PJSC, one of the largest heavy machinery manufacturers in Ukraine;

·        a 99.567%stake in Odessa Port Plant PJSC, one of the largest chemical producers inUkraine;

·        a 99.994%stake in the Ukrainian Bank for Reconstruction and Development PJSC;

·        a 100% stakein the President Hotel Private Joint Stock Company in Kyiv; and

·        a number ofmines and mining companies across the country.

The list also includes 43other state-owned companies in various industries, including 13 sea ports, thatwill be subject to privatisation once the legislation (which currently preventsthose companies from being privatised) has been amended.

The State Property Fund ofUkraine (the “Fund”) will beresponsible for putting the companies and assets up for sale via a series ofauctions.  The privatisation programmewill be open to all domestic and foreign investors, and no expressqualification and eligibility criteria currently apply.

To attract investment, theFund and the Ministry of Economic Development and Trade of Ukraine will launchan information campaign and will carry out road-shows for potential investors.

The Government expects the2015 privatisation programme to be the largest held in the last 20 years, andhopes that it will raise much needed capital, as well as improve the Ukrainianeconomy as a whole.

CMS has been providingservices in Ukraine for many years, and we have a long track record of advisingon privatisations across the region. If you would like to discuss any aspectsof the upcoming privatisation programme, then please do not hesitate to let usknow.

Authors:

Daniel Bilak, Managing Partner, daniel.bilak@cms-cmck.com

Graham Conlon, Partner, graham.conlon@cms-cmck.com

Tetyana Dovgan, Senior Associate, tetyana.dovgan@cms-cmck.com