IUD freezes investment projects in Ukraine
20 October 2008
Industrial Union of Donbas has frozen its investment projects in Ukraine, group co-owner Serhiy Taruta announced at a forum last Friday. Eugene Cherviachenko: IUD operates two steel mills in Ukraine, Alchevsk Iron & Steel (ALMK: BUY) and DMK Dzerzhinskogo Steel (DMKD: BUY). According to Taruta, the group planned to spend about USD 2 bln on Alchevsk Iron & Steel and USD 1.2-1.5 bln. Assuming this amount was mid-term CapEx, IUD has already finished its major projects: construction of a blast oxygen workshop at Alchevsk in 2007-2008; a oxygen converter shop, continuous casting machines and new blast furnace at DMK Dzerzhinskogo in 2007. Evidently, Taruta’s announcement affects the modernization of agglomerate factories, blast furnaces and oxygen converter shops at Alchevsk and DMK Dzerzhinskogo. We perceive Taruta’s speech as an attempt to attract government attention and seek state’s support. Debt financing options for IUD are exhausted; in our view, the group’s chances for acquisition in the short-term are high.
