OREANDA-NEWS. July 05, 2010. The shareholders of Mariupol Illich Steelworks, the major steel producer in Ukraine, have voted to increase the share capital by UAH 2.255bn to UAH 3.1bn by issuing 9,020 mn new shares with nominal value of UAH .25 each, the company announced July 1. During the first stage of the issue (emission) starting Aug 1 current shareholders may exercise their preemptive rights to buy out the shares of the new issue, and starting Aug 18, other investors can purchase the remainder of the additional issue. As a result of the new share issue, the ownership structure of the plant will be changed as follows come the following: 75% will go to Metinvest, 23% to Vladimir Boyko, and 2% to other investors. The Metinvest came up  with a commitment to invest USD 2bn investment promise, along with Avdeevka Coke, Hartzyzsk Pipe, Krasnodon Mine, and Ingulets OMEP, though it is yet unknown what form this contribution will take. Vladimir Boyko, the current CEO of MMKI, will keep retain his position.

Millennium Capital: the news has a long-term positive ramifications for Mariupol Illich, since it will secure the access to the production inputs, such as ore and coke, from the companies comprising Metinvest Holding. We also expect numerous synergy effects from the merger. However, in the short-term there is a risk that minority shareholders may be prevented from subscribing to the shares from of the new issue. Meanwhile, this news is positive for the Metivest Eurobonds. The acquisition of Mariupol Illich Steelworks will create one of the world's largest steel producers, with a beneficial effect on the unit costs through the substantial scale effects. Ultimately, this will result in improved financials and higher credit rating of the company.