Commercial House #7

Food Processing and Retail Outlet Seeks Foreign Partners

Commercial House #7 is a medium sized Closed Joint Stock Company, founded in 1970 and located at the cross-roads of two large highways in the center of the Moskovsky district of Kharkiv where approximately 500,000 people reside. Next to the firm there is a recreation park with approximately 5,000 hectares.

The firm is staffed with 200 people and owns the land parcel with the area of 6,900 square meters.

The real estate owned by the firm includes an architecturally completed complex of buildings. The first building houses the retail sales area with 5,500 square meters of retail floor space plus administrative and auxiliary offices. The second is a two-story multi-functional building in which the warehouse is located on the first floor and the medical and athletic facilities are on the second floor. The assessed value of the integrated property is US $1,800,000.

The company operates a sister operation in Poland, through which they purchase many of their critical raw materials including sausage ingredients, stuffings, and equipment.

The company operates a sister operation in Poland, through which they purchase many of their critical raw materials including sausage ingredients, stuffings, and equipment.

The company wishes to produce:

• Medical bandages

The retail area has 5,500 square meters (55,000 square feet) of space, which is very large by Ukrainian standards. The area is well lighted and clean and will serve well as a model on which to expand the business.

The firm has production facilities for baking bread and producing sausages. In the bakery, a Turkish oven produces 10,000 loaves of bread per day. The dough kneading equipment, which is capable of handling 5 to 7 tons per day, is very practical and runs on diesel fuel.

The company has the capacity to produce 8 tons of sausage per day in both the hard and soft (hot dog) types in 12 different varieties, 4 or 5 of which are the most popular. Both German and Austrian equipment is used in their sausage making operations. Smoking is done in a German, computer-controlled chamber, the only one of its type in Ukraine.

In order to expand, the firm needs to increase the number of retail outlets, reduce costs, and do more advertising. Their current emphasis is on expanding their manufacturing capacity and lowering costs.

The Director is most interested in having Western businesspeople and investors visit Kharkiv. They offered to receive 3 to 4 people and local expenses will be covered.

Goals of Joint Cooperation

1. Establishment of a supermarket with its own mini-production and packaging of food products (sausage, hot dogs, cheese, butter, milk, etc.);

2. Establishment of a supermarket with a fast food point-of-sale.

Suggested Forms of Cooperation

1. Investment: Cash or cash and property contribution into the ownership fund of the firm in the amount of US $1,500,000.

2. Credit: in the amount of US $1,500,000 on favorable terms (credit rate - no more than 12% per annum and the credit period-- 3 years, with repayment starting no earlier than year 2). Credit guarantee on the security of the integral property complex.

3. Mixed form of cooperation: Includes both investment and credit.

Contact

Mr. Yuri I. Polovko, Director

Postal address

Commercial House #7, Ltd.

57, Tractorostroitelei Ave.

Kharkiv

Ukraine

Telephone

(380) 572-62-41-00

FAX

(380) 572-62-41-00

Electronic mail

N/A

Information supplied by CEI 1997.  Last updated: January 19, 2004