Mariupol Heavy Machinery loses assets after Azovmash restructuring

Mariupol Heavy Machinery’s (UX: MZVM UK) production assets will be leased to Azovzahalmash (UX: AZGM UK), the Azovmash group announced in a press release published on its website on Friday. The move is a part restructuring within the group; no details on the terms of the lease were provided. Yegor Samusenko: We keep our view that minority shareholders of both key entities of Azovmash group (Mariupol Heavy Machinery and Azovzahalmash) will not be able to realize the value of their investments. Though Azovmash’s business have been posting strong results in 2007, 2008 and 9M10, neither traded entity has reported good financials, which we see as indicative of profit transferring within the group. Given the high free float (26%) of Mariupol Heavy Machinery, we see a consolidation of assets at Azovzahalmash (3% free float) as logical.