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Ferrexpo AG Seeks Investments

Ferrexpo AG Seeks Investments

31 October 2008

Ferrexpo AG, the controlling shareholder of Poltava GOK (PGOK: HOLD) plans to attract a USD 275 mln syndicated loan at a rate of LIBOR + 2.7. According to Interfax, a consortium of large European banks led by Societe Generale and BNP Paribas will syndicate the loan. The details of the deal were not disclosed. Eugene Cherviachenko: We assume PGOK is the most likely target of this loan since it is Ferrexpo AG’s only large asset. PGOK plans to expand iron ore mining (from 25 mln mt to 30 mln mt per annum) and pellet manufacturing capacity (from ~8 mln mt to ~11-14 mln mt per annum) by 2010. Ferrexpo AG is also actively seeking funds to accelerate construction of a modern steel mill, Vorskla Steel (estimated CapEx ~USD 1.5 bln). We assume that this loan is a pilot borrowing project as USD 275 mln is not enough for Ferrexpo AG/Poltava GOK to cover all planned capital expenditures.

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