Privat Group Sells Selected Steel Assets to Evraz

Yesterday, Russian steel major Evraz (EVR LI) announced that it acquired Privat group’s steel assets in Ukraine: 99.25% of Sukha Balka, 99.57% of DMP Petrovskogo (DMZP: BUY), 93.74% of Bagliy Coke (BKOK: N/R), 98.67% of DniproCoke, and 93.83% of Dniprodzerzhinsk Coke. The value of the transaction was not disclosed. Evraz said it expects to close the deal in 1Q08 and that it is not subject to regulatory approval. On Monday, Evraz said that it agreed to buy US-based Claymont Steel Holdings for USD 564.8 mln. Eugene Cherviachenko: The announcement is in line with expectations from our June 22 report “Privat to Exit Iron Ore Business?” We were surprised that the announced terms made no mention of Privat’s stakes in Pivdenny Iron Ore (PGZK: U/R) (47.5%) and Kriviy Rih Iron Ore (less than 50%). Metinvest/Smart group own a 44.4% stake in Pivdenny Iron Ore and around 50% of Kriviy Rih Iron Ore. According to rumors, if Privat or Smart decide to sell their stakes, the other party will have a preemptive right to buy out the shares. We maintain our key forecasts for the companies and targets. See our report from yesterday for more details.