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By Matthias Williams and Natalia Zinets
Sept 12 (Reuters) - Ukrainian investment announcements by Swedish furniture retailer IKEA and the Saudi Agricultural and Livestock Investment Company (SALIC) are votes of confidence in the country’s business climate, President Petro Poroshenko said on Wednesday.
Ukraine is battling to shake off an image of entrenched corruption that has long deterred foreign investors and held up the disbursement of billions of dollars worth of aid from the International Monetary Fund.
The announcements came as the Kiev authorities are trying to negotiate further loans with a visiting IMF delegation this month, needed to keep the economy on a stable footing and spending in check ahead of elections next year.
SALIC announced the purchase of Ukraine’s Mriya, one of Ukraine’s biggest farming companies which had defaulted on debts of $1.1 billion in 2014, a default which according to its current management was caused by fraudulent business practices.
Debt restructuring was completed last month.
“The decision by SALIC to acquire “Mriya Agro holding” is really an extremely important event and demonstrates the willingness of foreign investors to invest in Ukraine, fundamental changes in the investment climate and the attitude of investors to our country,” Poroshenko said.
The cost or terms of the purchase were not disclosed, but Poroshenko said it ran into hundreds of millions of dollars.
For SALIC, the purchase is a significant scaling up of its presence in Ukraine, one of the world’s biggest producers and exporters of cereals and oilseeds. A SALIC subsidiary already operates 45,000 hectares in Ukraine, with another 150,000 hectares coming from Mriya.
“Creditors and management succeeded not only in restoring the company’s operations after default, but also completed this unprecedented billion-dollar debt restructuring, making Mriya an attractive investment,” said Oleksiy Pavlenko, Chairman of the board of directors of Mriya Farming PLC.
“Ukraine’s institutions also demonstrated their ability to protect the rights of foreign investors.”
An IKEA executive earlier announced the company would open its first store in Ukraine next year, citing an improved investment climate. The announcement follows the entry of low-cost carrier Ryanair into Ukraine in March after initially walking away from the deal in 2017.
Corruption and a lack of trust in the court system remain the biggest obstacles to foreign investment in Ukraine, a report by the local investment company Dragon Capital said on Tuesday. (Editing by Jason Neely and Mark Potter)