Tatiana Serafin

Podcast Host, Professor, Writer

Tag: Steel

Ukraine Econ Upturn As its Billionaires Start to Raise Cash

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On Jul 22 2010

In Billionaires

Ukraine’s youngest billionaire, Kostyantin Zhevago, who almost lost his iron ore producer, Ferrexpo, when markets crashed two years ago, is back raising cash. According to Millenium Capital, Ferrexpo completed its road-show July 16 planning to place Eurobonds worth $500 million. The company plans to ramp up production by 50% over the next five years, and has the iron ore reserves to do so. ADDENDUM: It appears the Eurobond issue has been postponed.

This follows on the heels of fellow billionaire, Rinat Akhmetov, and the announcement that his steelmaker Metinvest raised $700 million via syndicated loan.

Ukraine has had success recently, negotiating a new $14.9 billion loan program with the IMF. As a result, Fitch upgraded Ukraine’s sovereign bonds stating “The IMF agreement improves the sovereign’s financing flexibility and will unlock additional funds from other international financial institutions.”

There is still a long-way to go — Ukraine’s real GDP fell 15.1% in 2009, according to Fitch, marking the second-worst economic performance after Latvia of the over 100 sovereigns rated by the agency — but billionaire confidence appears to be back up.

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Ukrainian Billionaire Akhmetov Tries For Another Steel Mill

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On Jun 17 2010

In Steel

After recently losing Ukraine’s fourth largest steelmaker, Zaporizhstal, to an unnamed group of Russian investors, Rinat Akhmetov, Ukraine’s wealthiest (with a fortune estimate by Forbes at $5.2 billion) is at it again.

Akhmetov’s Metinvest, Ukraine’s largest vertically integrated steel group, is negotiating a merger with Mariupol Ilyich Steelworks, the country’s largest flat rolled steel producer.

According to a note from financial services firm, Millenium Capital, the merger is a win-win for both parties and will help Akhmetov as he tries to take Metinvest public. “[Mariupol] will get access not only to the raw materials but also to the Group financial resources for modernization implementation and will improve the corporate governance too. On the other hand, Metinvest will also benefit from the impending merger. Firstly, it will joint the top 20 biggest steel producers in the world, with a crude steel production capacity of more than 17m tonnes/year, which will have a positive effect on the prospects of its long discussed IPO. Secondly, the assortment of the Holding production will increase and, thirdly, the capacity utilization will increase.”

Akhmetov’s holding company confirms the negotiations, stating, “Both the parties are considering possible scenarios of co-operation and of combining resources in order to strengthen the position of Ukrainian steelmakers on international markets.”

The obstacle: who owns the mill? On May 26, two men claiming to represent offshore companies registered in Cyprus, Boris Podolsky and Ilya Gorn, announced the sale of Mariupol to an unknown investor. Meanwhile, Volodymyr Boyko, Mariupol’s chief executive officer and manager of its shares, has stated to Ukrainian press that he “took part in no oral or written agreement to transfer their ownership.”

Russian giants like Severstal (owned by Russian billionaire Alexei Mordashov) are said to be in the mix. Will the Russians again foil Akhmetov’s bid to create a Ukrainian steel giant?

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Ukraine’s Richest Loses Deal for Coveted Steel Mill

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On Jun 02 2010

In Steel

Rinat Akhmetov, Ukraine’s wealthiest man with an estimated $5.2 billion steel and coal fortune according to Forbes, lost his bid for Ukraine’s fourth largest steelmaker, Zaporizhstal, in a surprise twist according to reports from Ukraine.

This week a group of undisclosed Russian investors took control of Zaporizhstal for a reported UAH 1.7 billion (about $220 million) supposedly financed by Russia’s state-owned Vneshekonombank (VEB Bank). That’s just over a month since the news broke back in April that Akhmetov’s Metinvest steel and mining holding company and Korea’s steel producer POSCO were on track to complete the deal to acquire a controlling interest in the steelmaker for $2 billion (according to Ekonomicheskaya Pravda).

The unexpected loss for Akhmetov and the rumors on price discrepancy are raising concerns about Russia’s influence in Ukraine under the new presidential administration of Victor Yanukovich who has been known to favor Russia. Also curious: Akhmetov is a member of Yanukovich’s Party of Regions.

Back in October, Metinvest and POSCO signed a memorandum of cooperation which called for the two firms to “exchange information and technologies to cooperate in seeking steel and mining business opportunities in Eastern Europe and former Soviet Union countries including Ukraine.” If the deal for Zaporizhstal had closed, Metinvest would have had an expanded product line, Zaporizhstal would have had access to Metinvest’s raw materials and POSCO would have become the second largest steel producer in the world according to investment bank, Millenium Capital.

In a research note, Millenium wrote “withdrawal of Metinvest from the deal undermines the market’s expectations of the dividend payout to have been approved at the next general meetings of  Azovstal and Avdiivka Coke Plant. It is an open secret that Metinvest has started earlier to concentrate cash funds for the Zaporizhstal purchase, which funds are no longer needed after Metinvest failed to close the deal.”


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