Metals and Mining

Interpipe Limited has failed to make its coupon payment for a sum of USD 8.75 mln on its USD 200 mln Eurobond issue, according to reports by the mass media. No additional information from bondholders or the Company is currently available.

According to the Ukrnews agency, in January 2010, Interpipe Novomoskovsk boosted pipe output by 22% MoM, or by 2.3 thsd tonnes, to 12.8 thsd tonnes.

According to the Ukrkoks association, Ukraine’s coke makers boosted coke output by 19% YoY to 1.52 mln tonnes in January 2010. In comparison to December 2009, however, the output level represented a 2.3% MoM decrease.

According to the World Steel Association, in 2009, global steel production experienced a contraction of 8% or by 1.22 bln tonnes. Steel production in the CIS declined by 14.7%, while for the EU, the decline stood at 29.7%. China enjoyed a growth in steel output by 13.5%. For India, output increased by 2.8%.

According to Andre Kuusvek, Director of the Ukraine division of the EBRD, the Industrial Union of Donbass (IUD) has commenced negotiations with 40 separate banks with respect to the restructuring of its debt. He also added that the EBRD holds a neutral view on the purchase of the 50%+2 stake in IUD by a group of Russians investors. However, at the same time, he confirmed that IUD will have the possibility to gain access to cheap Russian raw materials.

Interpipe, a major Ukrainian pipes producer, announced that 74% of holders of Eurobonds (for a total amount of USD 200 mln, maturing in August 2010 and currently trading with YTM 43%) have agreed to support the introduction of a lock-up and support agreement. This implies that the bondholders will not engage in any actions that could potentially invoke a cross-default before February 2, 2010. If the holders accounting for 75%+1 of the bonds eventually agree to the terms, they should receive USD 2.5 for every USD 1000 of bonds held.

According to an official press release by the Industrial Union of Donbass (IUD), a 50%+2 stake in the Company was sold to a group of Russian strategic investors, headed by Mr. Katunin (owner of the international steel trader Carbofer and former owner of the EVRAZ group). The total value of the deal has not been disclosed.

Ukraine’s steelmakers experienced a 20% decrease in total steel output in 2009 to the level of 29.8 mln tonnes.

According to an announcement by representatives of Mariupol Illich ISW, the Company should post a net profit of up to UAH 250 mln (USD 31.4 mln) in FY2009, compared with the UAH 700 mln (USD 88 mln) net loss that the Company reported in 1H09.