Druzhkivka Machinery Shareholders Vote to Create Branch Office

At Druzhkivka Machinery’s (DRMZ: BUY) EGM on August 22, shareholders voted to create a branch office, which management says should raise the company’s production capacity. No more details concerning the new office were disclosed. They also made changes to the company’s statute to add additional business activities (trading nonferrous and ferrous metals) and a clause regulating the company’s ability to strip assets in line with Ukrainian legislation. Shareholders voted to elect a representative from SCM to replace the outgoing representative from Avdiyivka Coke. Last week, the Ukrainian wire service, UNIAN, reported that SCM Limited (Cyprus) consolidated a 65.26% block of shares in Druzhkivka Machinery. Inna Perepelytsya: Druzhkivka Machinery is the third mining machinery company (after Dongirmash and Gorlovskiy Mashinostroitel) where SCM is main shareholder to create a branch office. According to a source within SCM, creation of branch offices is means of tax optimization. We are waiting to receive the statutes of all of the companies and the branch offices or an official comment from SCM for further clarification. SCM is planning to create a mining machinery holding – the creation of the branch offices, the shareholder restructuring and share consolidation all look connected to that goal. SCM told us that they are expecting to make an announcement about the creation of a holding in September.