UKRAINE OLIGARCH BUYS U.S. COAL GROUP 

By Roman Olearchyk in Kiev, Financial Times
London, UK, Friday, May 1, 2009

KIEV - Metinvest, the steel conglomerate controlled by Ukrainian billionaire Rinat Akhmetov, said yesterday it had acquired West Virginia-headquartered United Coal Company, in a purchase estimated to be worth up to $1bn.

Analysts said the deal showed some of Ukraine's leading businessmen were sufficiently cash-rich to make big purchases abroad in spite of a deep recession that has battered their country and halved production at their steel mills.

Mr Akhmetov is Ukraine's richest man. The value of Metinvest's UCC purchase, closed between the two privately owned companies, was not disclosed.
But local investment bank Dragon Capital estimated that the deal was worth $800m-$1bn, or about half the pre-crisis estimates made on the company's value during negotiations last year.

Metinvest is one of the largest steel groups in Ukraine, itself ranked as one of the top 10 steel-exporting countries. In addition to owning three steel mills, ore pits and coal mines in Ukraine, Metinvest acquired Italy's Trametal and the UK-based Spartan rolling mills from the Malacalza family in 2007 for about $700m.

Metinvest later acquired a rolling mill in Bulgaria when it merged with Smart-Holding, itself controlled by Russian businessman Vadim Novinsky and unnamed partners.  Smart's owners today hold a minority stake in the Akhmetov-controlled Metinvest.

Igor Syry, general director of Metinvest, said the UCC acquisition would boost his group's access to quality coking coal. It would "improve" steel quality and efficiency for the group, which has sharply cut use of increasingly expensive Russian natural gas as a fuel in its production cycle.

UCC, which accounts for 4 per cent of coking coal output in the US, reported sales of more than $500m in 2008. The company was founded in the 1970s by Jim McGlothlin, along with partners.

Dragon Capital steel analyst Sergiy Gayda said that in spite of the global steel industry downturn, a sharp drop in raw material prices and steep domestic currency depreciation in late 2008 had enabled Ukrainian steel mills to decrease production costs and offer "the lowest prices on foreign spot markets".

Many of Ukraine's oligarchs have borrowed heavily in past years, piling up foreign debt obligations. However, Metinvest was in a particularly strong financial position, said Mr Gayda.

LINK: http://www.ft.com/cms/s/0/eb5c5a1a-35e7-11de-a997-00144feabdc0.html