Nikopol Ferroalloy's Privatization Invalidated.

Yesterday the Kyiv Economic Court of Appeals ruled the purchase of the 50%+1 share stake in Nikopol Ferroalloy (NFER: SELL) by Prydniprovya Consortium (associated with the Interpipe group) unlawful. The respective purchase agreements were revoked and Prydniprovya Consortium was ordered to return the shares to the State Property Fund. In addition, the court obliged the state to refund the amount paid for the stake to Prydniprovya Consortium. The Consortium’s attorneys already said they would file an appeal to the Higher Economic Court today. Concorde Capital: The state?s chance to regain control over the plant have now improved substantially. Consequently, purchase of NFER by the consortium of Russian investors (Renova and Evrazholding’s shareholders) from Interpipe is now nearly impossible. However, if NFER’s stake is to be put up for a new tender, interested investors will be able to bid for it. On the other hand, Privat group scheduled yet another NFER EGM for July 28. If the state’s representatives decide to attend it, the EGM may likely approve changes to the company’s board and possibly vote to pay dividends, similar to what happened at Kryvorizhstal’s AGM earlier this year. We do not think the state will allow Privat to obtain control over the plant.