Mittal Steel Pays For Kryvorizhstal.

Mittal Steel (Germany) transferred USD 4.8 bln for a 93.02% stake in the second largest Ukrainian steel mill Kryvorizhstal (KSTL: BUY) to the State Property Fund. The National Bank of Ukraine (NBU) bought USD 4.8 bln on the interbank currency market at USD/UAH 5.0. As a result of this operation the NBU’s FX reserves exceeded USD 19 bln. Concorde Capital: Despite concerns that such a huge FX inflow (~7% of estimated GDP for 2005) would seriously deteriorate the balance in FX market, the official USD/UAH exchange rate remained stable at 5.05. Now it is up to the government to decide whether these funds will be allocated in a prudent way. Roughly USD 850 mln will be returned to the previous KSTL owner; USD 1.3 bln will be included in this year?s budget in connect with the 2005 privatization program; ~USD 1.6 bln has been earmarked to cover the 2006 budget deficit. The future of the remaining ~USD 1 bln is still unclear. The President has proposed directing the funds to finance different investment projects, although he is yet to specify which.