AVK, the second largest producer of confectionery products in Ukraine, has launched its first corporate bonds.

The variable-rate corporate bonds with a nominal value of UAH 9m (US$) mature on 16 January 2004. The bonds have a quarterly coupon payment with a semi-annual call option to provide additional flexibility to AVK and its bondholders. Alfa Bank is the manager for the bond issuance and CJSC Alfa Capital serves as its underwriter.

The bulk of the proceeds of this issue, said Donetsk-based AVK, will be used to finance completion of the technical modernization of a newly-built factory in Donetsk and installation of new production lines to manufacture flour-based and extrusion products.

AVK, with its Major and Mix brands, is already the leading producer of extruded snacks in Ukraine while its recently introduced branded crackers and biscuits have been well received in the marketplace.  

"For AVK, the bond issue is much more than a means for achieving our aggressive growth targets of 13% in sales and 16% in profits for the year 2002. It is also a reflection of our spirit of innovation and our constant striving to use the most advanced and forward looking technologies to ensure AVK's success.  Being true to this spirit, we chose to pursue this novel source of financing. This is not only new for AVK, but represents a whole new source of financing for the Ukrainian private sector," said Iryna Starodubova, AVK's financial director. 

Natalie A. Jaresko, President and CEO of Western NIS Enterprise Fund (WNISEF), which holds a 25% stake in AVK, added: "With the emission of the bonds, which are expected to generate a great interest on the market, AVK has entered another important phase of its development.

"The bonds reflect AVK's creditworthiness and underscores the company's strong position on the Ukrainian confectionery market with its premium branded products, dominant market share and growing profitability. The AVK brand has always been associated with the superior quality and taste of the company's sweets. Now, the success of the bond issue will testify that AVK represents solid financial results and superior returns to providers of capital."

AVK's corporate bonds will be circulated on the secondary market on 26 July 2002.

Ihor Seletskiy, director of stock exchange operations of PFTS (First Stock Trading System), said: "The stock market of Ukraine has been in operation for ten years now. However, up until recently, we haven't seen too many tradable securities. With AVK issuing its first corporate bonds, the market is expected to finally get a tradable liquid market instrument."