Metinvest Group, taking into account associated companies and joint ventures, is expected to increase the payment of income tax by more than seven times in January-June 2021, year-over-year, to UAH 10.2 billion, a source in the tax authorities told Interfax-Ukraine.
In turn, Metinvest confirmed to the agency information about a significant increase in income tax payments in the first half of 2021.
“Enterprises of the Metinvest group will pay income tax in the first half of 2021, replenishing the national budget by UAH 10.2 billion (compared to the first half of 2020, the income tax paid was about UAH 1.4 billion). Thus, according to the results of the first half of the year, income tax payments increased by 7.4 times. This unprecedented increase in tax payments during coronavirus pandemic will help support the cities where Metinvest enterprises operate, pay salaries in full and on time communal and medical workers,” the company told the agency.
At the same time, the group said that Metinvest is one of the largest taxpayers in Ukraine. Thus, in 2020, the company increased its tax payments by 5%, to UAH 22.1 billion year-over-year. Earlier, the group said that over 15 years of its work, it transferred UAH 165 billion to the budgets of all levels.
Fitch Ratings has revised Metinvest B.V.’s outlook to stable from negative, the Long-Term Issuer Default Ratings (IDRs) and senior unsecured rating for the bonds of the Ukrainian integrated steel company are affirmed at ‘BB-‘, the recovery rating is ‘RR4’, the rating agency said on its website. “The revision of Metinvest’s outlook reflects strong cash flow generation linked to supportive steel and iron ore markets amid the global economic recovery and our expectation of a gradual reduction of gross debt to $ 2.9 billion ($ 2.5 billion net; both Fitch-adjusted values) over the next three years. It also takes into consideration that some of this cash flow will be used for earnings accretive growth, including taking control of Pokrovske Coal and incremental capital expenditure,” the report says.
“Fitch now forecasts funds from operations (FFO) gross leverage of 1.5x-1.6x over the medium term, providing for very comfortable headroom compared to the negative ratio guideline of 2.5x for the ‘BB-‘ rating. But we note that the company does not have a formal dividend policy or gearing target,” it says.
Metinvest is a vertically integrated group of mining and metallurgical enterprises. Its enterprises are located in Ukraine – in Donetsk, Luhansk, Zaporizhia and Dnipropetrovsk regions, in European countries. In particular, in Bulgaria there is Promet Steel plant with a capacity of 500,000 tonnes of rolled metal per year, in Italy – Metinvest Trametal and Ferriera Valsider with a total capacity of 1.2 million tonnes per year. In the UK, the company owns Spartan UK plant that can produce 200,000 tonnes of rolled steel per year.
The main shareholders of the holding are SCM Group (71.24%) and Smart-Holding (23.76%), which jointly manage it.
Metinvest Holding LLC is the management company of Metinvest Group.
Metinvest B.V. (the Netherlands), the parent company of the international vertically integrated mining and metallurgical group Metinvest, has established control over PrJSC Mine Construction Management Department No. 1 (Lysivka village, Pokrovsky district, Donetsk region) and PrJSC Automobile Enterprise Ukrbud (Pokrovsk, Donetsk region), included in Pokrovske Colliery.
According to the statement of the department in the information disclosure system of the National Securities and Stock Market Commission of Ukraine with reference to the information received on March 19 from Metinvest B.V., on March 18, 2021, the company received the ownership of the controlling stake in this enterprise.
“In pursuance of the requirements of Part 2 of Article 65 of the law on Joint Stock Companies, Metinvest B.V. said that on March 18, 2021, it acquired ownership of the controlling stake in the company as a result of the acquisition of shares in the charter capital of Sviato-Pokrovska Mine No. 3 LLC and became indirectly the owner of 20,466 ordinary registered shares of PrJSC Mine Construction Management Department No. 1, and taking into account the number of shares owned by it and its affiliates, became (directly and indirectly) the owner of 54.23% (from 4.29%) of the charter capital of PrJSC Mine Construction Management Department No. 1,” the enterprise said.
At the same time, it is specified that Metinvest B.V. has not acquired shares of PrJSC Mine Construction Management Department No. 1 within the last 12 months.
In turn, in the information of PrJSC Automobile Enterprise Ukrbud in the information disclosure system of the National Securities and Stock Market Commission of Ukraine with reference to the information received from Metinvest B.V. on March 19, it is reported that on March 18, 2021, the company received the ownership of a controlling stake in this enterprise.
“On March 18, 2021, Metinvest B.V., as a result of the acquisition of shares in the charter capital of Sviato-Pokrovska Mine No. 3 LLC, indirectly became the owner of 2573558 common registered shares of PrJSC Automobile Enterprise Ukrbud, which is 50,000971% of the charter capital of Ukrbud,” the company said.
It also clarifies that Metinvest B.V. has not acquired shares of PrJSC Automobile Enterprise Ukrbud within 2020.
Mariupol-based Illich Iron and Steel Works (Donetsk region), part of Metinvest Group, in January-February this year increased the production of general rolled products, according to recent data, by 19% compared to the same period last year, to 660,000 tonnes.
As the enterprise told Interfax-Ukraine, steel production during this period increased by 3.7%, to 700,000 tonnes, cast iron by 15.2%, to 765,000 tonnes, and sinter by 14.3%, to 2.152 million tonnes.
In February, the plant produced about 300,000 tonnes of general rolled products, 340,000 tonnes of steel, 410,000 tonnes of cast iron, and 1.07 million tonnes of sinter.
Metinvest is a vertically integrated group of mining companies. Its main shareholders are SCM Group (71.24%) and Smart-Holding (23.76%), jointly managing the company.
Metinvest Holding LLC is the managing company of Metinvest Group.
MetinvestB.V. (the Netherlands), the parent company of a vertically integrated group of steel and mining companies, has established control over the largest Ukrainian producer of coking coal, PrJSC Pokrovske Mine Management (Donetsk region), of which the group became a minority shareholder in 2018.
According to the company’s statement in the information disclosure system of the National Securities and Stock Market Commission with reference to the information received on March 5 from Metinvest B.V., on March 4, 2021, the company received the ownership of a controlling stake in PrJSC Pokrovske Mine Management.
“On March 4, 2021, Metinvest B.V., as a result of the acquisition of shares in the charter capital of Industrial Coal Holding (ICH), became indirectly the owner of 486148489 common registered shares of PrJSC Pokrovske Mine Management, became (directly and indirectly) the owner of 67.28% of the charter capital of PrJSC Pokrovske Mine Management,” according to the information of the enterprise in the commission.
At the same time, it is noted that, taking into account the above, the company Metinvest B.V. on March 4, 2021, it acquired the ownership of a controlling stake in PrJSC Pokrovske Mine Management. The highest price at which Metinvest B.V. and its affiliates acquired shares in PrJSC Pokrovske Mine Management is UAH 12.80 over the last 12 months.
Metinvest B.V. (the Netherlands), the parent company of a vertically integrated group of steel and mining companies, has acquired an additional stake in the largest coking coal business in Ukraine, Pokrovske coal business, increasing its effective interest to a controlling stake.
According to a company press release issued on Friday, as a result of consolidating the acquired businesses into the group, Metinvest expects to become fully self-sufficient in coking coal for its hot metal production.
The acquired business comprises several entities (jointly referred to as the Pokrovske coal business), the most significant of which are Pokrovske Colliery and Svyato-Varvarinskaya Enrichment Factory. Together, they mine raw coal, enrich it and sell coking coal concentrate. The assets are located on the border of Dnipropetrovsk and Donetsk regions of Ukraine, close to the group’s coke producers. None of the acquired assets are located in the non-controlled territories of Ukraine.
Pokrovske Colliery produces mostly high-quality K-grade coking coal, which is used in metallurgical coke production. As at 1 January 2019, its JORC Mineral Resources and Reserves amounted to 248 million tonnes and 151 million tonnes, respectively, enough to maintain operations for at least 30 years.
Svyato-Varvarinskaya Enrichment Factory is one of the largest beneficiation plants in Ukraine. Its design processing capacity is also around 8 million tonnes of raw coking coal per year.
In 2020, the Pokrovske coal business mined 6.2 million tonnes of raw coal, up 55% from 2018, and produced 3.2 million tonnes of coking coal concentrate, up 39% from 2018.
According to the press release, the acquisition of control in the Pokrovske coal business follows Metinvest acquiring 24.77% of the effective interest in the Pokrovske coal business in July 2018, as well as an option to purchase the remaining 75.22% from the other co-investors upon condition of obtaining all required governmental and other approvals. In October 2020, the group received a one-year approval from the Antimonopoly Committee of Ukraine to obtain control over certain entities being part of the Pokrovske coal business.
Total consideration for an additional stake acquired by the group in the Pokrovske coal business was driven by the value of the option Metinvest obtained in 2018.
In 2019-2020, amid a potential business combination with Metinvest, the Pokrovske coal business restructured a significant part of its loans and borrowings. As at December 31, 2020, the Pokrovske coal business had external debt of $535 million. This mainly consists of a $480 million restructured debt facility maturing in 2030. It is Metinvest’s intention to prudently manage the debt portfolio of the Pokrovske coal business.
Commenting on the news Chief Executive Officer of Metinvest Yuriy Ryzhenkov said that this acquisition is very important for Metinvest.
“The group has experienced a lack of adequate coking coal supplies in recent years. We are now fully self-sufficient in coking coal, which strengthens our vertical integration. From here, the next objective is to integrate the assets into the group to maximise synergies. I am confident that the Pokrovske coal business will improve its efficiency as part of Metinvest and believe that its employees will benefit from our corporate culture and strong social guarantees,” the top manager said.
