Ukraine settles dispute with Transmashholding regarding Luhanskteplovoz

The Cabinet of Ministers settled its dispute over the privatization of Luhanskteplovoz (UX: LTPL UK) to Transmashholding, Prime Minister Mykola Azarov, said yesterday, according to local media reports. A 76% stake in Luhanskteplovoz was privatized in mid-June in an auction won by an entity related to Transmashholding. In September, the Kyiv City Economic Court ruled that the privatization auction was illegitimate in response to another bidder’s lawsuit. Yegor Samusenko: Though this decision eliminates the risk of Transmashholding not returning as owner of Luhanskteplovoz, as we have pointed out before, its de facto return as owner took place back in November, when Transmashholding placed a significant order at the plant. We stay with our target price of USD 0.42 (downside of 10%) and SELL recommendation as we do not anticipate a rapid recovery in demand for locomotives and see a high risk of transfer pricing within Transmashholding.