Metinvest to squeeze out minority shareholders of Ukrainian assets
5 March 2018
Several Ukrainian corporate assets of Metinvest
(METINV), Ukraine’s largest steelmaker, announced on March 2-3 that Barlenco
Ltd – a Cyprus company affiliated with the majority owners of these assets
(several holding companies that are part of Metinvest) – intends to squeeze out
their minority shareholders.
The minority stakes that Barlenco intends to buy are
3.3% of Azovstal (AZST UK), 0.7% of Ilyich Steel (MMKI UK), 3.6% of Northern
Iron Ore (SGOK UK), 0.2% of Inhulets Iron Ore (IGOK UK), and 0.2% of Central
Iron ore (CGOK UK).
The management of each asset has 25 working days to
determine the share price at which the squeeze out will happen.
Dmytro Khoroshun: Metinvest
might spend as much as roughly USD 100 mln in total on the squeeze outs. This
estimate is based on Metinvest’s total profitability and includes USD 70 mln
for the 3.6% stake in Northern Iron Ore and USD 25 mln for the 3.3% stake in
Azovstal.
The squeeze outs will be positive for Metinvest
because they constitute a step forward in corporate governance by eliminating
the bureaucratic burden and legal risks attached to the current quasi-public
status of these assets.
We maintain our Speculative Buy recommendation on the
Metinvest Eurobond on expectations of a deal (restructuring or refinancing) in
the near future. For more details behind our recommendation, please refer to
our March 1 report on Metinvest.
