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THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM THE RUSSIAN FEDERATION, UKRAINE, THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
This announcement is not a prospectus. Investors should not subscribe for or purchase any transferable securities referred to in this announcement except on the basis of information in the prospectus published by MHP S.A in connection with the admission of GDRs representing shares of MHP S.A. to the Official List of the Financial Services Authority and to trading on the London Stock Exchange plc's regulated market for listed securities (the "Prospectus"). Copies of the Prospectus are available from the Company's registered office (8-10, rue Mathias Hardt, L-1717 Luxembourg, Grand Duchy of Luxembourg) and from the offices of Baker & McKenzie LLP at 100 New Bridge Street, London, EC4 6JA.
This communication is for distribution only to persons who (i) are outside the United Kingdom and qualified to receive it in the relevant jurisdiction, or (ii) have professional experience in matters relating to investments, or (iii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc") of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (all such persons together being referred to as "relevant persons"). This communication is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons.
This announcement and the information contained herein is only directed at persons in member states of the European Economic Area who are "qualified investors" within the meaning of Article (2)(1)(e) of the Prospectus Directive (Directive 2003/71/EC).
15 May 2008, London For Immediate Release
MHP S.A.
ADMISSION TO THE OFFICIAL LIST AND COMMENCEMENT OF UNCONDITIONAL DEALINGS ON THE LONDON STOCK EXCHANGE
MHP S.A. ("MHP" or the "Company"), one of the leading agroindustrial companies in Ukraine, focusing on the production of poultry and the cultivation of grain, is pleased to announce that its Global Depositary Receipts (GDRs) have been admitted to the Official List of the UK Listing Authority and to trading on the London Stock Exchange. Unconditional dealings in MHP's GDRs will commence on the International Order Book at 09.00am today. The Company's GDRs will trade under the ticker symbol MHPC.
MHP and WTI Trading Limited (the "Selling Shareholder"), successfully completed an offering of 21,500,000 shares of the Company, comprising an issue by the Company of 10,750,000 new ordinary shares and the offer and sale by the Selling Shareholder of 10,750,000 existing ordinary shares (excluding 3,225,000 additional shares which are the subject of the over-allotment option granted by the Selling Shareholder) in the form of GDRs (collectively, the "Offering"),representing approximately 19.41% per cent of the Company's issued ordinary share capital immediately after the Offering (before the exercise of the over-allotment option and approximately 22.32% per cent. in the event of its exercise in full).
Morgan Stanley and UBS Investment Bank acted as Joint Global Coordinators and Joint Bookrunners for the Offering.
Commenting on today's announcement, Yuriy Kosyuk, Chief Executive Officer of MHP, said:
"We are extremely pleased by the outcome of this Offering and are delighted to be listed on the London Stock Exchange. It has been a real success in what is clearly a difficult market.. MHP will apply the proceeds to finance the expansion of its poultry and grain businesses, including potential land acquisitions and potential acquisition opportunities in the Ukrainian agricultural sector."
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For further information please contact:
| Financial Dynamics Ben Foster (London) Marc Cohen (London) Leonid Solovyev (Moscow) | London: +44 20 7831 3113 Moscow: +7 495 795 06 23 |
Notes to Editors:
Information on MHP
MHP is the leading producer of poultry products in Ukraine, with a 2007 market share for industrially produced chicken meat of approximately 36%, according to the State Committee on Statistics of Ukraine. Management expects the annual consumption levels for poultry in Ukraine to continue to grow in the short to medium term.
It has strong brands in the consumer markets in which it operates. Based on research conducted by GfK in February 2008, unprompted brand recognition of MHP's "Nasha Ryaba" brand was 92%, and prompted brand recognition was 100%. MHP also has several other national and regional brands for processed meat products. Management believes that its brands are perceived as representing the highest quality and greatest reliability thereby helping to support a strong pricing strategy. MHP intends to continue to focus its marketing efforts on enhancing the value of its brands, particularly "Nasha Ryaba".
MHP owns and operates each of the key stages of chicken production processes, from feed grains and fodder production to egg hatching and growout to processing, marketing, distribution and sales (including through MHP's franchise outlets). In 2007, MHP internally produced all of the hatching eggs for its chicken operations and all of its fodder. Based on its 2007 harvest, MHP expects to source internally approximately 60% of the corn used for fodder during 2007-2008 agricultural year. Vertical integration reduces MHP's dependence on suppliers and its exposure to increases in raw material prices. In addition to cost efficiency, vertical integration also allows MHP to maintain strict biosecurity and to control the quality of its inputs and the resulting quality and consistency of its products through to the point of sale.
MHP's current business developed from its grain trading activities in 1999 and 2000, when MHP was one of the leading grain traders in Ukraine. MHP currently grows corn, to support the vertical integration of its chicken production and, increasingly, other grains such as wheat and rape for sales to third parties. In 2007, MHP produced 476,000 tonnes of grain, compared to 291,000 tonnes in 2006. MHP leases agricultural land located primarily in the highly fertile black soil regions of Ukraine.
In 2007, approximately 60%, and 30% respectively, of MHP's chicken products, were sold through branded franchise points of sale and to retail chains. In recent years, major supermarket chains have become an increasingly important distribution channel for MHP's food products in Ukraine, and MHP expects sales through these chains to increase further. MHP is the preferred supplier of chicken and various other meat products to a number of nationwide supermarket chains, including Furshet, Velyka Kyshenya and Metro, enabling MHP's product availability and penetration and therefore sales to increase as these retailers continue to expand throughout Ukraine.
To support its sales, MHP maintains a distribution network consisting of 11 distribution and logistical centres, within major Ukrainian cities. MHP uses its trucks for the distribution of its products, which Management believes reduces overall transportation costs and delivery times. MHP's distribution and logistical centres also provide general support to MHP's franchisees and monitor franchisees' compliance with MHP's retail standards. Management believes that MHP's extensive distribution network helps it to enhance its overall customer service, and to secure its market positioning, by ensuring quality, reliability and timely product delivery and increases the overall availability of MHP's products.
MHP was the first to introduce a number of value-added products to the Ukrainian market, including its "Lehko!" line of convenience food products and meat snacks, as well as delicacies such as foie gras and its premium "Certified Angus" beef products. MHP has also been a leader in retailing and packaging innovation, such as its branded franchisee "Nasha Ryaba" network. Management believes that these consumer driven innovations address a shifting trend among consumer preferences in Ukraine toward healthier, higher quality and convenient food consumption.
MHP has been active in agricultural operations since 1998 and MHP's founder, Mr Kosyuk, was one of the first to capitalise on opportunities in the Ukrainian agricultural market following Ukraine's transition to a market economy. Most of MHP's senior management team comprised of experienced highly motivated professionals who have worked closely and effectively together, have been with MHP since 1998, when MHP started its grain trading activities and have over 100 years of combined agro-industry experience. Management believes that MHP's agro-industry expertise will help it to identify and capitalise on additional opportunities in the future.
Strategy
MHP's overall objective is to maintain and expand its position as one of the leading agroindustrial companies in Ukraine, while strengthening its position as the leading Ukrainian poultry production company and developing its grain cultivation operations. Key elements of its strategy include:
Expanding chicken production capacity. In order to meet the expected growth in demand, MHP has begun and already completed the first phase of its expansion programme to substantially increase its annual poultry production capacity to 350,000 tonnes by 2010.
Expanding capacity for grain production. In light of world prices and demand, MHP intends to further expand its grain cultivation capacities by acquiring rights to additional high-yielding land plots throughout Ukraine, particularly in areas near its existing grain production facilities. In the short to medium term MHP intends to expand its grain growing capacities by approximately 20% to 25% annually through acquisitions of rights to additional land plots in Ukraine, concentrating on fertile soils in proximity to its existing facilities.
Increasing vertical integration. MHP perceives vertical integration as key to maintaining consistently high quality standards and reducing costs by realising economies of scale. MHP aims to become self-sufficient in corn requirements for its poultry production in the 2008-2009 agricultural years and onwards. In addition, MHP intends to continue to find complementary uses for the various by-products of its production processes.
Continue to develop MHP's distribution network and customer base. MHP plans to further develop its distribution network through opening of additional distribution centres in major Ukrainian cities to capture additional retail shelf space, improve geographic coverage and increase product availability and visibility. Management believes that MHP will benefit from its position as a significant supplier of chicken and other meat products to Ukraine's modern supermarket chains as these chains continue their rapid national expansion.
Continued agroindustrial diversification. MHP has continually sought to develop new business lines and intends to continue this focus on producing valueߛadded products, such as new convenience food products under its "Lehko!" brand, in order to further improve its sales margins and to strengthen its brands. As part of this diversification strategy, MHP is currently considering further development and expansion of its meat processing facilities and intends to maintain its beef and pork production facilities to position MHP to capitalise on future growth as these markets develop in Ukraine.
Information on Ukraine
Independent since 1991, Ukraine represents a large consumer market with 46 million people and a growing economy fuelled by the rising affluence of domestic consumers and external demand for Ukrainian products. In 2007, per capita GDP amounted to US$2,965 and the current pace of household income growth is expected to be sustained in 2008 owing to increasing salaries and enlarged social payments. The WTO approved Ukraine's "accession package" in February 2008 and Ukraine is expected to become a member of the WTO in May 2008.
Morgan Stanley & Co International plc and UBS Limited are acting exclusively for the Company and no one else in connection with the Offering and will not regard any other person (whether or not a recipient of this announcement) as their respective clients and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Morgan Stanley & Co International plc and UBS Limited nor for giving advice in relation to the Offering, the contents of this announcement or any transaction or arrangement referred to herein.
In connection with the Offering, UBS Limited, acting as stabilising manager, may over-allot or enable it to satisfy any over-allocations or which stabilise, maintain, support or otherwise affect the market price of the GDRs at a level higher than that which might otherwise prevail in the open market. Such transactions may be effected on the London Stock Exchange and any other securities market, over the counter market, stock exchange or otherwise. There is no assurance that such transactions will be undertaken and, except as required by law, UBS Limited does not intend to disclose the extent of allotments and/or stabilisation transactions under the Offering.
This announcement does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, securities to any person in the United Kingdom or any other European Economic Area state, Australia, Canada, Japan, Ukraine, the Russian Federation, the United States or in any other jurisdiction. The securities referred to herein may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended (the "Securities Act") or another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Subject to certain exceptions, the securities referred to herein may not be offered or sold in the United Kingdom or any other European Economic Area state, Australia, Canada, Japan, Ukraine, the Russian Federation, the United States or to, or for the account or benefit of, any national, resident or citizen of the United Kingdom or any other European Economic Area state, Australia, Canada, Japan, Ukraine, the Russian Federation or the United States. The offer and sale of the securities referred to herein has not been and will not be registered under the Securities Act or under the applicable securities laws of Australia, Canada, Japan, Ukraine or the Russian Federation. There will be no public offer of the securities in the United States.
The offer and the distribution of this press release and other information in connection with the listing and offer in certain jurisdictions may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
This announcement and information contained therein are for information purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. Information in this announcement or any of the documents relating to the Offering cannot be relied upon as a guide to future performance. The price and value of securities may go up as well as down. Persons needing advice should contact a professional adviser.