Metinvest interested in ISD purchase because of its two assets ,the Achevsky and Dneprovsky mills

The largest Ukrainian mining and metallurgical holding, Metinvest, a member of the financial and productive group System Capital Management is interested in the purchase of the entirely upgraded Achevsky metallurgical combine (AMK) and the reconstructed Dneprovsky metallurgical combine (DKM) , the branches of Donbass Industrial Union (ISD). A source of the Interfax-Ukraine reports that currently Metivest studies the opportunity of buying of a share in ISD and of its 2 metallurgical enterprises. Procrastinating in buying out of the rest 49.99% of ISD stocks from the Ukrainian holders by the Russian majority shareholders makes it possible for Metinvest to do an alternative offer for purchase of this ISD stocks holding. Metinvest is interested first of all in purchase of AMK, and purchase of the whole share of the corporation is of secondary importance.

At the background of slowly changing financial state of ISD, the slow restructuring of external debt, weak guarantees of political support to the Ukrainian ISD shareholders and lack in its own raw materials base at the corporation, the transaction can presuppose good price for the most important ISD assets, AKM and DKM. Metinvest can be supported in the negotiations by the fact that ISD sales will intensify the restructuring of the external debts of the corporation. Metinvest gives no comments upon the issue.

ISD has not completed negotiations with the international creditors for the debt restructuring and has failed to sign the corresponding agreement due to a shareholders conflict. In particular, the creditors’ committee that include the large western investor banks has blocked signing of all agreements for the external debt restructuring because of the conflict between the Russian and the Ukrainian owners around buying out of 49.99% of the stocks held in property of S. Taruta and O. Mkrtchyan now.

ISD and its restructuring agent the Swiss UBS Bank have not begun the preliminary negotiations with the holders of ISD eurobonds for a sum of $150 million. Their repayment data expired on September 23rd 2010. The corporation is still in default state for them. The analysts interviewed by the Agency then thought that in near time ISD could meet agreement with the creditors’ committee and the eurobonds holders at the background of the further lasting shareholders conflict.

On January 17th 2011 the ISD Vice President A. Pilipenko claimed that the restructuring agreements will be signed in January. Earlier he claimed that ISD debt was much less than $3 billion and that the negotiations with the creditors were held uninterruptedly, including with participation of VEB. The mass-media reported that ISD debt would be restructured before 2018.

In the beginning of October 2010 they reported that ISD actively negotiated with the pool of international banks for its credit portfolio restructuring. They were at the final stage. The corporation emphasized that it executed its financial liabilities conscientiously, appreciated cooperation with the international banks and investors and was sure in the future mutually advantageous cooperation.

ISD was founded in 1995. It’s an integrated holding company owning stocks in the mining and metallurgical complex enterprises. The corporation members are Achevsky metallurgical combine, Dneprovsky metallurgical combine, the Hungarian Dunaferr metallurgical combine and the Polish ISD Huta Czestochowa.

In January 2010 they announced about purchase of 50% + 2 stocks of the Ukrainian corporation by the investors’ consortium headed by A. Katunin, the owner of the Swiss trader Carbofer, the former owner of Evraz, with financial support of VEB. The current shareholders S. Taruta and O. Mkrtchyan remained the owner of 49.99% in ISD.

Within 2-3 months AMK is going to raise converter steel production and to reach annual capacity of 5 million tons. The plant is an enterprise will full metallurgical cycle.

DMK specializes in production of cast iron, raw and rolled steel and commodity goods. In 2010 it declined production of ready rolled steel 20.8% to 2.608 million tons,  steel by 19.7% to 2.769 million tons and cast iron 18.1% to 2.618 million tons.
Translated by Nadezhda Poltoratskaya


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