Ekosem-Agrar strengthens the financial foundations for its growth strategy

• 2012/2018 bond increased by EUR 18 million to EUR 78 million
• Promising environment: undersupplied milk market, farmland prices picking up
• Targets through 2015: 28,000 dairy cows, more than 250,000 hectares of farmland

Walldorf, 31 October 2013 – Autumn 2013 has seen Ekosem-Agrar, the German holding company of Russian milk producer Ekoniva Group, further strengthening its solid financial foundations for the continued implementation of its growth strategy. In a private placement, Ekosem-Agrar increased its corporate bond (ISIN: DE000A1R0RZ5), which carries a coupon of 8.5 % and will mature on 6 December 2018, by EUR 18 million to EUR 78 million. The bonds are expected to be listed for trading in the Bondm segment of the Stuttgart stock exchange starting 4 November 2013. With equinet Bank AG serving as lead manager and book runner, the issue was subscribed by institutional investors in Germany and Switzerland. It comes on the back of a 5% capital increase which raised the company’s equity by EUR 10 million in September 2013.

Since the issue of its first corporate bond in March 2012, Ekosem-Agrar has increased its dairy herd from 12,200 to 17,000 cows and expanded its farmland from 71,300 hectares to 103,400 hectares. Earnings before interest and taxes (EBIT) for the first half of 2013 rose by 55% year-on-year from EUR 8.9 million to EUR 13.8 million. The dividend holiday committed to in the terms and conditions of the bond issue means that the Group’s profitable growth continues to strengthen its equity position.

“We have a clear growth strategy in place, during which period we want to push ahead our profitable business model and continue to expand our market-leading position”, says Stefan Dürr, Managing Director and majority shareholder of the Ekoniva Group. “Farmland prices in Russia are very low by international comparison, particularly in view of the high quality of the soil and the potential yields. We currently see a clear upward trend which should continue over the medium term.”

The company’s dairy herd is to be increased to 28,000 cows by 2015. As the fodder for the herd is grown on Econiva’s fields, the company’s farmland is to be increased from 186,000 hectares (end of September) to more than 250,000 during the same period. Envisaging a continuation of the dynamic growth strategy beyond the year 2015, the company is resolved to increase its equity by a significant amount.