The SPF Intends To Take Sverdlovsky Machine Building From DRMZ.

Yesterday, the State Property Fund (SPF) sent a letter to Druzhkivsky Machine Building (DRMZ), in which it blames DRMZ for failing to make the investments in Sverdlovsky as called for by the sale-purchase agreement. DRMZ says that while it paid for its 50%+1 stake in December 2004, the shares were transferred to its ownership only in November 2005, thus preventing DRMZ from managing the company last year. The company asked the SPF to prolong the term for investments in Sverdlovsky, but the SPF refused. Concorde Capital: The news is not likely to influence our target price for Druzhkivsky, as it is already factored into our valuation. We are now reviewing the target for DRMZ, based on the company’s announced plans to increase production by more than we initially expected.