Metinvest subsidiary moves to collect EUR 179 mln from Palermita Management

Dniprovskyy Coke, a subsidiary of Ukraine’s largest iron
ore, coke and steel producer Metinvest (METINV), applied to become the creditor
party to an April court order that directs Palermita Management Ltd (Belize),
the debtor, to pay EUR 179 mln (USD 210 mln), according to an Aug. 18 decision
by Dnipropetrovsk Region Economic Court.

The court set Aug. 30 as the date for the hearing on
this creditor replacement issue. The April court order was related to a March decision to require
Palermita Management to pay EUR 179 mln to Dniprovskyy Steel, a bankrupt
Ukrainian steel plant and the original creditor party, for steel products sold
during February 2020 – January 2021.

Recall, in July Dniprovskyy Coke acquired, for USD 339 mln, the
PP&E and other assets from Dniprovskyy Steel. The other assets included USD
457 mln of accounts receivable, 99.9% of which are due from Palermita Management.

Dmytro Khoroshun: If in the
end Dniprovskyy Coke collects some or all of USD 457 mln of accounts receivable
from Palermita Management, it will be positive for Metinvest.

It is currently unclear whether Palermita Management
is a Metinvest subsidiary. If so, it would be positive that the money will stay
within Metinvest and will not go to the original creditor, Dniprovskyy Steel,
which is outside of Metinvest’s perimeter.

We maintain our neutral view on METINV bonds.