OREANDA-NEWS. April 1, 2011. Mariupol Heavy Machinery (MZVM), a Ukrainian producer of freight railcars, intends to increase its share capital by 21.8x up to UAH 83.8mn through an additional share issue (320mn shares with nominal value of UAH 0.25), Interfax-Ukraine reported on Mar 31. The matter is on the agenda of the company’s AGM scheduled for Apr 15.

Millennium Capital considers the news as NEGATIVE for MZVM. We expect the AGM will vote to support the issue. The new share count (currently 15.4mn + 320mn of the new issue) implies the share price of UAH 0.49. Meanwhile, minority shareholders may face dilution as the placing price of issued stocks may pop up above the par of UAH0.25 and closer to the market price (UAH 10.7 as of Mar 30).