Avdiivka Coke widens loss in 2011, plans AGM for April 25

Avdiivka Coke (AVDK UK) reported a 12x yoy increase in its net loss to USD 32 mln in 2011, the company said in an AGM announcement yesterday. Avdiivka Coke plans to hold an AGM on April 25; the agenda for the meeting includes a “significant deals” item. Shareholders that vote against this item will obtain a 30-day option to sell their shares to the issuer (see our notes dated March 1 and 22 for more).

Roman Topolyuk: Based on interim results, we estimate 94% of the company’s annual loss was generated in 4Q11, which indicates greater use by Avdiivka of more expensive imported coal from Metinvest subsidiary United Coal Company during the last few months of 2011 in a transfer pricing scheme. The stock market did not react negatively to the company’s losses (+0.32% yesterday), which we explain by the put option, which effectively limits the downside to Friday’s closing price, UAH 5.2617 per share.