Khartsyzsk shareholders vote to not pay dividends

Khartsyzsk Pipe (HRTR UK) shareholders voted at their April 9 AGM to not pay dividends on its 2012 profit. The Metinvest-controlled producer of large-diameter pipes was a generous dividend payer since 2006. Shareholders also approved the company’s net income of UAH 272.9 mln (USD 33.8 mln, down 65.4% yoy) and voted to allow the company’s management to enter into significant deals.

Roman Topolyuk: The decision to not pay dividends was a real disappointment for the market, which sent the company’s shares plunging 25% in trading that day. It was a surprise for us too, though there’s a clear explanation: the market has tightened significantly for large diameter pipes in the Russian Federation. Meanwhile, orders from Khartsyzsk customers in Ukraine are too small to utilize the company’s assets. Some orders might appear from Central Asia, though the timing is unclear so far.

Shareholders who voted against approval of significant deals at yesterday’s AGM have a right to offer their shares to Khartsyzsk Pipe (by May 9) at an estimated price of UAH 0.79/share (45% premium to current market). We suggest using this opportunity.