Kernel Holding denied bankruptcy allegations

Kernel Holding S.A. considers the petition submitted by Mikhail Stadnik frivolous and flagrantly vexatious and intends to seek a dismissal of the case by the Luxembourg District court as promptly as possible, as well as damages for the prejudice caused by Mikhail Stadnik's actions, the company says in a statement published today, December 21.

It is noted that Kernel Holding and its subsidiaries have a strong liquidity position, with cash on hand and operating cash flows providing ample sources of liquidity for ongoing debt service.

As of 18 December 2020, the company specifies, the Group had USD 266 mln of cash on accounts. In addition, the Group has access to a number of new sources of funding both from international banks and from capital markets, as demonstrated most recently by its successful placement of USD 300 mln 6.75% Eurobonds.

"Kernel Holding S.A. intends to seek a dismissal of the case by the Luxembourg District court as promptly as possible, as well as damages for the prejudice caused by Mikhail Stadnik's actions," the statement reads.

Since 2012, Kernel Holding S.A. has been involved in continued disputes with Mr. Stadnik, his former spouse and certain entities controlled by them in connection with the acquisition of LLC Stiomi Holding, a farming company located in Khmelnytsky region of Ukraine. In April 2012, Kernel Holding and some other buyers (collectively, the “Stiomi Buyers”) entered into a master purchase agreement to acquire Stiomi Holding from the Stiomi Sellers, and as of 30 June 2018, the consideration paid for Stiomi Holding by the Stiomi Buyers amounted to USD 24 mln.

The final payment was due and payable only after the fulfilment of certain conditions to the satisfaction of the Stiomi Buyers and subject to rights of set-off in respect of claims against the Stiomi Sellers. The Stiomi Buyers submitted several claims to the Stiomi Sellers in respect of the non-fulfilment of the Stiomi Sellers’ obligations. In December 2012, the Kernel Holding received a request for arbitration from the Stiomi Sellers in which the Stiomi Sellers claimed amounts alleged to be payable to them.

In February 2018, the arbitral tribunal delivered its award, which was partly challenged by the Stiomi Buyers in the High Court in London. Attachment orders were obtained by the Stiomi Sellers in Switzerland but were ultimately dismissed by the Geneva Court of Appeal.

In March 2019, the High Court in London remitted the award to the tribunal for reconsideration in certain respects and a further hearing took place before the tribunal in September 2019. The tribunal’s revised award, which was delivered in December 2019, required the Stiomi Buyers to pay an aggregate amount of approximately USD 30.3 mln to the Stiomi Sellers.

In addition, a third party brought claims asserting that the former spouse of Mr. Stadnik assigned her claims to such party, which Mr. Stadnik disputes.

On 16 December 2020, Mr. Stadnik initiated proceedings in Luxembourg District court in commercial matters, petitioning for bankruptcy of Kernel Holding S.A. An initial hearing in this matter is scheduled for 8 January 2021.

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