OREANDA-NEWS. March 31, 2010.  UMPO’s additional share issue is likely to be floated by closed subscription in favor of the company’s primary owner, Oboronprom. The move should help the company lower the debt load. However, if the placement is held below the market, the harm caused by the minority interest dilution may outweigh benefits from the reduction in debts.

The board of directors of Ufimskiye Motors (Russian acronym UMPO) has recommended that an EGM be called to contemplate holding at additional share issue by closed subscription, the company reported on March 30. March 29 was the cutoff date. The issue size and placement price have not yet been defined. The EGM is scheduled for May 5.

The total size of the additional issue could not exceed the declared volume of 1,596,636,132 shares, which is 500% more than the total number of company shares presently in circulation. In our opinion, the issue will be floated in favor of the company’s majority shareholder, Oboronprom.