Stakhaniv Wagon AGM OKs additional share issue

At their AGM today, Stakhaniv Wagon (SVGZ: BUY; TP USD 12.5, fully diluted USD 6.4) shareholders voted in favor of a twofold (USD 7.85 mln) share capital increase to USD 15.69 mln. The shares will be sold at par value: USD 0.21. Subscription will be held in two stages between July 08 and July 29, 2008. The ex-rights date is July 7. During the first stage of subscription (which according to Ukrainian legislation can be no less than 15 days), shareholders can subscribe on a pro-rata basis for new shares. The AGM voted to allow two companies, Progres and Zaliv Shipyard (SZLV: N/R), both related to Finance & Credit, to subscribe for new shares. These companies are thus entitled to subscribe for shares remaining after the first subscription stage, as they were with Stakhaniv Wagon’s previous share issue as well. Proceeds will be used for working capital and to finance CapEx. The market price adjusted on a fully diluted basis is USD 4.8 vs. the current USD 9.4. Shareholders also formally accepted 2007 financial results, which were publicly available two months ago (see our news of January 31), and voted to retain full 2007 profits in shareholders’ equity. Inna Perepelytsya: In regards to IPO plans, Eduard Misevra, the head of Stakhaniv Wagon’s supervisory board, told us after the AGM, that there is still no decision on whether the company will conduct an IPO as part of KrAZ holding or on its own. Misevra also said that based on current production, the company will make 7,200 wagon in 2008 (vs. 5,556 wagons last year), which is slightly above our forecast (7,000 wagons). We reiterate BUY on the stock.