Active Energy Group, a Ukraine-based supplier of wood chip and timber products traded on London’s Alternative Investment Market, on July 15 started a landmark forestry joint venture with three indigenous aboriginal groups in Alberta.
The business has the exclusive right to commercialize more than 100,000 hectares of mature forests belonging to Metis Settlements, descendants of European fur traders and aboriginal peoples.
The Métis Settlements and Active Energy Group will each hold a 45 percent equity interest in the project, which will be incorporated in Canada and headquartered in Kelowna, British Columbia, with the remaining equity to be held by Ronald M. Derrickson. He and Active Energy CEO Richard Spinks of England met in Ukraine in 2008 when they were both involved in agriculture.
Active Energy Group will commit to commercialize the forestry assets in exchange for its equity stake. According to the firm’s statement, the forests are primarily composed of mature standing aspen and poplar hardwood and spruce, pine and fir softwood species. The joint venture will be allowed to enter into subleases with third parties for approximately 200 years to help the “long-term economic development for the Metis peoples, in collaboration with international investors and commercial partners,” the statement says.
In addition to exporting wood chips culled from 70 Ukrainian forestries used for biomass power generation, Active Energy also manufactures medium-density fireboard. It has operations in Ukraine, the United Kingdom, Turkey, Spain and Montenegro. In 2013 it reported sales of more than $8 million in 2013, according to its annual report. But in 2012, a mere $240,000 in sales were reported.
“We are still growing. We have made some moves over the last years to diversify our business, signing the deal with Canada is one of the steps,” said Richard Spinks, CEO of Active Energy.
Volumes are also increasing, according to Spinks. Last quarter the company processed 25,000 tons of wood and has plans to produce 35,000 tons in the next quarter.
“We are growing quite nicely in Ukraine, obviously it is difficult for us because of the problems we have in Ukraine at the moment. But we…are not running away, we invested,” says Spinks.
In April, the company relocated wood processing plants from two deep-water ports in Mykolaiv Oblast to the Borivage dockside facility at Yuzhny Port on the Black Sea coast near Odesa. The move was explained by having lower logistical costs and better access to Montenegro and Spain. Active Energy has a processing and logistics agreement in Montenegro and supply agreements with Spain’s two largest forestry operators.
Active Energy has contracts for the purchase of wood with 70 Ukrainian forestries, added Spinks, employs 33 people.
Who owns the company isn’t as clear as its financial figures and operations. Spinks declined to say who actually owns Active Energy. According to its annual report, its largest shareholders are Gravendonck Private Foundation (Holland) with 30.5 percent, Eastwood SA (Luxembourg) with 12.22 percent, Windstar Investment SA (Panama) with 11.38 percent, Brahma Finance Limited (Monaco) with 3.89 percent, and Otkritie Securities Ltd (U.K.) with 3.4 percent
Incorporation information of the shareholders was provided by the Organized Crime and Corruption Reporting Project, a Kyiv Post partner.
One shareholder, Otkritie, is Russia’s largest independent financial group by assets, which exceed $51 billion. Otkritie’s major shareholders currently include Vadim Belyaev of IFD Kapital Group, Ruben Aganbegyan of ICT Group, LUKOIL-GARANT Private Pension Fund, Alexander Mamut, and Sergey Gordeev, according to company information.
This is not the first time a company with which Spinks is involved has business ties with Russian investors. Both Spinks and Derrickson worked in agriculture in Ukraine. The Englishman headed Landcom International and in 2007 raised $111 million on London’s AIM exchange, plus an additional $20 million in 2008. But in December 2011, Swedish agricultural company Alpcot Agro with assets in Russia acquired Landkom for only $17.7 million. Financial analysts negatively assessed the deal for Landkom’s shareholders.
Canadian Derrickson invested nearly $15 million in two majority-owned agricultural businesses in Dnipropetrovsk. He had built a 20,000-ton capacity grain elevator, among other capital improvements, but in 2013 his assets were frozen as part of legal proceedings. In an earlier interview with the Kyiv Post, Derrickson accused his former partners of defrauding him. He is in the process of recovering his agricultural assets in Ukrainian courts.
Kyiv Post staff writer Iana Koretska can be reached at [email protected].
