ZALK?s EGM Sends A Positive Signal To Investors

Concorde Capital: Zaporizhzhya Aluminum Mill?s (ZALK: HOLD) EGM on July 28 pointed to improvements in the company’s future — ZALK has finally reconciled with the new authorities. Shareholders voted to replace those members of the company’s Supervisory Board representing Interpipe, with SuAL representatives. By dissociating itself from Interpipe, the company minimizes its political risk. This is in line with the earlier transfer of ZALK from class 2 to class 1 electricity prices, which effectively reduced electricity costs by ~15% and closed the conflict with the state over the alleged non-fulfilment of investment commitments. ZALK?s next goal is to negotiate with the government over a differentiated electricity tariff that was cancelled early this year. The company will post 1H05 profits  despite the cancellation of preferential electricity tariff. In addition, as the management explained to shareholders, the charter fund?s two fold increase through an additional share issue was blocked by a court ruling. Therefore, effective current MCap of ZALK is now only USD 81 mln, a low P/S-2004 of 0.37.