Makiyivka Steel Mill To Be Sold In 2006.

The government intends to privatize its 60.86% stake in the Makiyivka Steel Mill next year. Concorde Capital: The Makiyivka Steel Mill, Ukraine’s most outdated steel company, accumulated huge debt arrears prior to 2004. In 2004, as a result of financial recovery its major production assets were put up for sale and purchased by the Makiyivka Metal Plant, a closely held company controlled by SMART Group which invested ~USD 132 mln in the mill in 2004. SMART Group is related to Russian businessman Vadim Novinskiy and owns a number of ore mining assets in Ukraine. Specifically, it has a ~99% stake in Ukraine’s largest ore miner Ingulets GOK (IGOK: BUY) and on par with Privat group controls Yuzhnyi GOK (PGZK: BUY). Currently the state-controlled Makiyivka Steel Mill only owns a number of social assets. Therefore, we think that the only feasible buyer could be SMART Group who may do this to rule out possible disputes with the government as to the mill’s financial recovery.