Public Joint Stock Company "Kievgorstroy" has officially begun the process of preparing for recapitalization, with expectations of financial assistance from the government and participation from minority shareholders, as reported by Vladislav Andronov, Deputy Chairman of the Kyiv City State Administration for self-government issues and Chairman of the commission addressing problematic issues related to the activities of "Kievgorstroy," during a meeting with investors.
He reminded that a shareholders' meeting is scheduled for February 14, where the agenda includes aligning the company's charter and internal regulatory documents with current legislation, as well as creating the necessary conditions for a supplementary issuance of shares. According to Andronov, after the amendments to the charter and the supervisory board regulations are made, the issue of the additional share issuance could be resolved at the next meeting.
"The city budget contains a provision that if the shareholders' meeting of 'Kievgorstroy' decides on recapitalization, such funds, approximately 2.6 billion UAH, are earmarked for allocation. Regarding minority shareholders (who own 20% of KGS), the city is interested in their participation in the recapitalization," Andronov stated.
As reported, the Kyiv City Council supported the decision (No. 155/9964) to increase the authorized capital of Public Joint Stock Company "Kievgorstroy" to stabilize the company's financial situation through additional issuance and acquisition of shares amounting to up to 2.56 billion UAH. The City Council also backed the decision (No. 155/9963) to appeal to the Cabinet of Ministers to consider compensating Public Joint Stock Company "Kievgorstroy" for planned total losses of 2.28 billion UAH related to the completion of "Ukrbud" projects, particularly through preferential loans and other forms of assistance.
Regarding compensation for "Ukrbud" projects, the city is actively corresponding with the Government, but most responses from ministries and agencies are formally negative. Specifically, Alexander Koren, Director of the Department of Interbudgetary Relations and Local Budgets at the Ministry of Finance, replied that "the issue of implementing the aforementioned compensation from the state budget can only be considered within its financial capabilities, which, due to the acute budget deficit caused by the conditions of martial law, are extremely limited."
Thus, investors' main hope for the launch of "Kievgorstroy" projects lies in the additional issuance from municipal budget resources. According to Andronov, after completing all procedures, the Kyiv City Council plans to allocate the budgeted funds to the company during 2025. As for the phased restoration of projects and their completion timelines, this will be decided directly within "Kievgorstroy," taking into account financial capabilities and the construction readiness of the projects.
As reported, in March 2024, the KCSA established a temporary commission to address problematic issues related to Public Joint Stock Company "Kievgorstroy."
Based on the audit of "Kievgorstroy," conducted in 2023 by the state enterprise "Baker Tilly Ukraine Consulting," LLC "Audit Firm NHD-AUDIT," and LLC "Ernst and Young," no signs of actions leading the company towards bankruptcy, concealment of financial insolvency facts, or mass transactions involving related parties were found. At the same time, auditors determined that "Kievgorstroy's" operations were disrupted due to external factors: COVID-19, full-scale war, and the "Ukrbud" factor.
Public Joint Stock Company "Kievgorstroy" was established in 1994 based on the property of the state municipal construction corporation "Kievgorstroy" by merging controlling stakes of 28 enterprises and other assets into its authorized capital. The holding includes 40 joint-stock companies, in which the company owns shares, six subsidiaries, and 51 enterprises as associated members.
According to the National Securities and Stock Market Commission (NSSMC), the main shareholder of Public Joint Stock Company "Kievgorstroy" is the Kyiv City Council (80%).