Metinvest seized assets contributed 5% to its 2016 EBITDA, CEO says

Ukraine’s largest steel producer Metinvest (METINV) drew 5% of its 2016 EBITDA from its enterprises in the occupied territories of Donbas that were “nationalized” in March, CEO Yuriy Ryzhenkov said in an interview with the biz.nv.ua news site, published on April 12. These enterprises generated about USD 210 mln in losses in 2014-2016, he said, and they didn’t bring cash to the holding in the way they operated during the last three years. He also mentioned that Krasnodon Coal provided 8% of all the holding’s coking coal needs in 2016.

Andriy Perederey: The negative effect of the asset seizure on Metinvest’s EBITDA looks lower than we estimated (10% of EBITDA) and is in line with the number what Fitch provided in its April 6 ratings release. All this is in line with our view, and the view of major rating agencies, that Metinvest will be able to easily generate enough cash flow in 2017 to service its debt and even deleverage fast, despite the loss of assets. We are keeping our positive view on Metinvest bonds, which are now trading at 95-96% of par, seeing their fair price at 98% of par.