Metinvest to acquire zinc-coater Unisteel

Metinvest (METINV), Ukraine’s largest steelmaker,
received permission from the Anti-Monopoly Committee of Ukraine to acquire
Unisteel, a producer of zinc-coated hot-dip galvanized (HDG) coils,
Interfax-Ukraine reported on March 2.

Unisteel, based in Ukraine’s Kryviy Rih, was
constructed in 2007-2010 at a cost of USD 24 mln and has the capacity of 100 kt
per year, according to Interfax-Ukraine. In December 2017, Metinvest announced plans to use Unisteel’s
capacities using a tolling scheme and the cold-rolled coils produced at Ilyich
Steel as the input material.

Dmytro Khoroshun: Metinvest’s
efforts to capture margin by expanding its high-value-added capacities are
positive, provided the price it pays is right. In case of Unisteel, we estimate
that the HDG production margin is USD 150/t (or USD 15 mln p.a.) at most, and
therefore Metinvest should not pay more than USD 90 mln for the plant.

We maintain our Speculative Buy recommendation on
Metinvest Eurobond on expectations of a restructuring or refinancing deal in
the near future.