Alchevsk Iron & Steel To Increase Charter Fund 13.9 Times.

The company?s (ALMK: BUY) shareholders approved an issue of 10 bln new shares with a par of USD 0.02. The new number of shares will be 10,775.3 mln and the subscription price will be equal to par. The first stage of subscription will take place from December 16, 2005 to February 16, 2006, and the second stage on February 17-18, 2006. Shareholders entered into the register as of December 16, 2005 will have the right to subscribe for new shares. The company will use the share issue proceeds (USD 198 mln) to overhaul its equipment. Alchevsk Iron and Steel decided not to pay dividends for 2004. Concorde Capital: There have been rumors that some of ALMK?s investments will be put on the balance sheet of a JV created by IUD rather then ALMK itself. Coupled with the risk of dilution caused by the charter fund increase, this is a scary news for the company?s minority shareholders. In addition, at the AGM the company?s majority shareholders stated that more share issues should be expected in the future. We may revise our recommendation on the company, if we find out that the risks attached to the stock outweigh its potential upside.