It is reported that shareholders of Stakhaniv Railcar Plant decided at their AGM recently to increase the statutory fund to USD 15.69 million up by USD 7.85 million. The attracted funds will be used to increase SVGZ's working capital and finance its capital expenditures. The issue of 37.73 million new shares will be sold at par value of USD 0.21.

The shares subscription will be held in two stages from July 08 and July 29th 2008 with an ex rights date of July 7th 2008. Shareholders are offered the opportunity to subscribe on a pro rata basis for new shares during the first stage of subscription which will be no less than 15 days.

Shareholders also decided to include Progress Plant and Zaliv Shipyard both related to Finance & Credit, in the list of other investors and, therefore, to allow them to subscribe for new shares during the second subscription stage. Shareholders also approved the 2007 financial results and voted to channel 2007 net income to cover losses of previous years. It was also announced that SVGZ plans output at 30,000 tonnes of items in 2008.

After the AGM, Mr Misevra head of SVGZ's supervisory board said that the company expects to produce 7,200 railcars in 2008 up by 29.6% YoY. He also said that it is not clear whether the SVGZ will go for an IPO as part of KrAZ holding or on its own.

The new 2008 production target is positive news for SVGZ as it is above our expectations of 7,070 units and the management's previous plans of 6,600 railcars. Our positive view on the plant is also supported by the confirmation of its plans to increase steel structure and railcar capacities to 52K tonnes and 10,000 cars respectively by 2009 to 2010. SVGZ's market price adjusted to the new number of shares is USD 4.76 against the current USD 9.31.

(Sourced Millennium capital)