Intermarket retailer group launches second bond issue

By Alla Vetrovcova / June 13, 2005 04:52 PM 

While Ukraine’s stock market continues to make limited progress, the bond market is becoming increasingly active and quite productive for medium-sized businesses. Not only are the issues becoming more frequent, some of the less risky companies are raising considerably larger sums through the bond route.

KYIV, June 13 – Some large businesses in Ukraine are holding back on new projects while awaiting clear signals and constructive decisions from the government. However, many medium-sized businesses are on the move. The need for smaller loans coupled with less-risky bond issues as a valuable financing instrument have opened the door for rapid growth in some of these companies.

Lviv-based Intermarket group, a developing supermarket chain, has announced a UAH 50 million bond issue that will be used to support the construction of a number of new supermarkets by the company in 2005. 

Optima Invest is a lead manager of the issue and Ukreksim Bank is the underwriter.

According to Roman Motychak, marketing manager at Optima Investment bank, this is a significant amount for a local issue.

“The first issue proved to be a successful tool, and another one will allow the company to expand further,” Motychak said. When the company issued UAH 10 million in 2004, it was sold out in two weeks.

“The market dictates the need for development in and involvement of new regions,” said Roman Shlapak, a head of Supervisory Board at Intermarket.

“Issue of corporate bonds is one of the best ways to finance quickly and [stimulate] dynamic development. We have already been persuaded by the first bond issue, which allowed us to increase our turnover significantly,” Shlapak said.

Two three-year issues consist of a “B” and “C” series each worth UAH 25 million. The “B” series bond offering is expected to start August 15 and the series “C” will be issued October 15.

Intermarket, in business since 1992, is the owner of the supermarket chain, Arsen; Barvinok, a chain of discount stores; and two cash & carry shops. It opened its first shop in 1998, and since then, it has proved to be a leading retailer in Western Ukraine. Its turnover reached UAH 428 million in 2004, almost double the previous year. It reported turnover of UAH 125 million in the first quarter of 2005.

Intermarket has been developing its new supermarket chains and discount shops in the Volyn and Ivano-Frankivsk regions, and is ready to start construction of shopping centers in Rivno and Ternopil oblasts as well. Priority for the company is to set up shopping centers in convenient locations in densely populated city districts