IUD Continues International Expansion.

According to the Vice President of the Industrial Union of Donbas Volodymyr Kravets IUD is considering the purchase of up to 50% in the Italian steel rolling company Giammoro. The deal is projected to be finished by May 2006. Currently Giammoro is owned by Duferco, a Swiss metal trader that works with IUD in the distribution of its steel products abroad. In addition, IUD will likely purchase 50% in Duferco to become a full-fledged partner in its trading business by 2007. IUD plans to finance its development plans mostly with loans. To this end, they are going to refinance USD 500 mln in 2006 and draw an additional USD 200 mln in credits. The corporation controls Alchevsk Iron & Steel (ALMK: BUY), DMK Dezrzhynskogo, Kramatorsk Iron & Steel and Alchevsk Coke (ALKZ: BUY) in Ukraine, Dunaferr and DAM Steel in Hungary and the Huta Czestochowa steel mill in Poland. It has projected sales of USD 3,749 mln in 2006 (up 8% yoy) and USD 4,008 mln in 2007 (up 7% yoy). The company posted EBITDA of USD 608 mln in 2005 and expects EBITDA-2006 at USD 719 mln. Concorde Capital: IUD’s strategy is to tap into the high-end European market by purchasing steel rolling companies in Europe and supplying them with semis from steel mills in Ukraine. In particular, Giammoro will be fed with semis from DMK Dzerzhynskogo. IUD does not have its own iron ore and coking coal assets, but is seeking to purchase them in Ukraine or Russia.