Metals and Mining
June 5, 2008Zaporizhstal: miracle is here
On April 10, Zaporizhstal signed a contract with Siemens VAI for construction of a USD 1.7 bln, 5.5 mln mt oxygen converter, continuous casting complex. Until recently, it was not clear how the company would finance this CapEx program, especially in light of persisting transfer pricing. But on May 12, it was announced that Citigroup was syndicating a USD 250 mln, LIBOR+2.5% credit for Zaporizhstal. We believe that both implementation of the CapEx program and an eventual abolition of transfer pricing have just become real. By 2012, Zaporizhstal will become much younger, modern an ISW, and will continue to be a ripe takeover target all along. For years, the company has been an outsider in both modernization and corporate governance. Now, Zaporizhstal is on a brink of huge changes not many have believed in. Largest value usually is found in such situations.