On 14 September, Avangardco Investments Public Ltd, the leading producer of shell eggs and egg products in Ukraine, has announced the agreement by its Chairman and controlling shareholder, Oleg Bakhmatyuk, to transfer his 77.49 per cent shareholding in the Company to Ukrlandfarming PLC, a company controlled 100 per cent by Mrg Bakhmatyuk.

Ukrlandfarming is a leading Ukrainian vertically integrated agro-industrial company focusing on the cultivation of crops and the production of sugar from the sugar beet it grows. Ukrlandfarming also breeds cattle, primarily for beef and raw milk production, produces seeds and leather, and distributes various agricultural feedstocks both to third-party customers and to its divisions. As of 30 June 2011, Ukrlandfarming managed approximately 480,000 hectares of arable land, one of the largest banks by size among Ukrainian companies. According to the State Statistics Committee of Ukraine, in 2010, Ukrlandfarming accounted for approximately three per cent of the total Ukrainian grain crops production, approximately 8.6 per cent of the total Ukrainian sugar production, approximately 14.3 per cent of the total Ukrainian beef production and approximately 12.9 per cent of the total Ukrainian leather production. Ukrlandfarming also owns and operates four grain silos and 110 horizontal storage facilities with a total storage capacity of around 1.1 million tonnes.

Ukrlandfarming was established in 2007 by Mr Bahkmatyuk and is a public limited company registered in Cyprus.

Transfer of Avangardco

Under the terms of the transfer, the controlling shareholder transferred his 77.49 per cent stake in Avangardco to Ukrlandfarming.

Following the transfer, Mr Bakhmatyuk remains the ultimate beneficial owner of Ukrlandfarming, directly controlling 100 per cent of the share capital and the majority shareholder of Avangardco, controlling 77.49 per cent of the share capital.

The transfer is expected to be completed within the next two weeks subject to the satisfaction of transfer requirements.

As a result of the transaction, Nataliya Vasylyuk (CEO of Avangardco) will be appointed to the Board of Directors of Ukrlandfarming.

The Company believes that this transaction will have the following potential benefits for Avangardco's shareholders:

• Avangardco will gain economies of scale in combining its trading operations with that of Ukrlandfarming in order to further reduce the costs of its grain purchases.
• The risk of input cost volatility to Avangardco will be reduced as it will also have an option to source fodder grain from Ukrlandfarming going forward.
• Avangardco will be able to gain cost synergies in combining usage of its grain silos with that of Ukrlandfarming.
• Avangardco will benefit from marketing synergies as its products could be cross-sold to Ukrlandfarming's local and international customers as part of a broader product offering.
• Avangardco will continue to be listed on the London Stock Exchange and there will be no change to its listing obligations and corporate governance.

Commenting on the announcement, Mr Bakhmatyuk, Chairman of Avangardco, said: "This transaction is aimed at restructuring and rationalising my ownership in agricultural assets, and will deliver additional benefits to all Avangardco's shareholders by providing additional supply and operational security, whilst also deriving significant benefits from a larger and more integrated sales and marketing offer."