OREANDA-NEWS. December 14, 2010. On Friday, Dec 10, the management of Azovzahalmash (AZGM) and Mariupol heavy machinery plant (MZVM) took a joint decision to lease out the MZVM’s property complex to AZGM, as posted on the corporate site of Azovmash, which controls both companies. The decision was coordinated with a pool of major borrowers of the holding.

Millennium Capital considers the news as NEGATIVE for MZVM. The lease means all cash flows will be transferred from MZVM to AZGM. In our view, the arrangement aims at improving the financial health of AZGM at the expense of MZVM, as the former is more important for Azovmash in terms of revenue generation and besides is much more vulnerable, since 100% of its debt (UAH 1.3bn) is short-term. The decision is still to be approved at EGM which is not yet announced.