Stakhaniv Wagon AGM to Consider Increasing Charter Fund To USD 15.7 mln

The agenda for Stakhaniv Wagon’s (SVGZ: BUY) AGM on May 19 includes consideration of a twofold charter fund increase via additional share issue. The company is planning to issue 37.371 mln shares at par, USD 0.2 per share. Subscription would take place July 8-29. Inna Perepelytsya: The company was highly leveraged in 2007 (D/E 96%), but its high CapEx program (USD 52 mln over 2007-2010) requires additional investment, which has led management to partially seeking funding via shareholder equity. We expect the share issue will carry similar requirements for subscription as the company’s issue in November-December 2007 (see our Oct 30 report). Based on the current market price, the required adjustment to a fully-diluted basis is 49%, which suggests arbitrage opportunity (see our strategy report of February 21, 2008 for more).