Kyiv City Council decides to capitalize Kyivmiskbud by UAH 2.56 bln

Kyiv City Council supported the decision to increase the charter capital of Kyivmiskbud Holding Company in order to stabilize the company's financial position by issuing additional shares and acquiring them for up to UAH 2.56 billion.

Some 77 city council deputies supported the corresponding decision at a plenary session on Thursday.

"The implementation of the draft resolution will improve the financial condition of Kyivmiskbud Holding Company, which will facilitate the restoration and completion of its construction of residential complexes. This will solve the problems of a large number of citizens, in particular, military personnel and their families, relieve social tension, strengthen trust in the government and achieve a general positive synergistic effect in the construction industry and in the Kyiv real estate market," the explanatory note to the draft resolution states.

It is noted that the additional issue will be carried out without reducing the existing size of the share package of the territorial community of Kyiv (80%).

The calculation of the amount of UAH 2.56 billion was carried out as the difference between the amount of necessary additional financing of the company during the implementation of the baseline scenario determined during the audit of Kyivmiskbud and the government's compensation for the total planned damage in the amount of UAH 2.28 billion.

Kyiv City Council also supported the decision to appeal to the Cabinet of Ministers of Ukraine with a request to consider the issue of compensating PrJSC Kyivmiskbud for the total planned damage in the amount of UAH 2.28 billion associated with the completion of Ukrbud facilities, including through preferential loans and other forms of assistance.

According to the draft appeal, the Cabinet of Ministers is invited to consider the issue of compensation not only through capital budget transfers, but also through the provision of preferential loans to finance construction, revising the terms of state programs for mortgage lending to the population, and facilitating the search for other sources of financing.

In addition, it is proposed to purchase housing for military personnel in the residential complexes of Kyivmiskbud.

Currently, Kyivmiskbud is responsible for 24 construction sites: more than 120 houses with 548,600 square meters of living space. As of May 31, 2024, out of 18 Ukrbud facilities accepted on the balance sheet, seven were fully commissioned, four – partially.

As reported, in March 2024, Kyiv City State Administration created a temporary commission to resolve problematic issues related to the activities of PrJSC Kyivmiskbud.

Based on the results of the audit of Kyivmiskbud, conducted in 2023, by Baker Tilly Ukraine Consulting, Audit firm NHD-AUDIT LLC and Ernst & Young LLC, it was established that there were no signs of actions to bring the company to bankruptcy, concealment of facts of financial insolvency or implementation of mass transactions by related parties. At the same time, the auditors found that the activities of Kyivmiskbud were disrupted due to external factors: COVID-19, a full-scale war, the Ukrbud factor.

On November 17, 2023, the Kyiv City Council commission approved an interim report with recommendations and proposals for the further work of the developer, including the purchase of apartments in Kyivmiskbud facilities, consideration of the possibility of issuing a financial loan or additional capitalization of the company. The commission also recommended that Kyiv City Council apply to the Cabinet of Ministers on the issue of compensation to Kyivmiskbud for the total planned damage associated with the completion of the implementation of the projects of the Ukrbud construction corporation in the amount of UAH 2.28 billion.