Ferrexpo is pressing ahead with efforts to raise at least $100 million in share capital

Ferrexpo, an iron ore producer with assets in Ukraine, is working to raise at least $100 million in share capital to avoid bankruptcy. This is stated in a notice to the annual general meeting of shareholders, which is due to take place on 29 June.

The group continues to operate under significant constraints caused by the war in Ukraine and the associated operational and financial challenges, the statement notes.

The company continues to operate one of its four pellet production lines and to export its products to customers in Europe and the Middle East.

Ferrexpo remains focused on cost management and optimising its sales mix to maximise the duration of its working capital. In particular, the group generated net proceeds of $7.7 billion from the sale of its own transhipment vessel, the ‘Iron Destiny’.

The company has maintained its liquidity adequacy forecast. Ferrexpo expects that available cash (excluding funds frozen at Mbaer Bank) will last longer than until the end of August 2026, as previously forecast.

However, this forecast depends on a number of factors – fluctuations in iron ore prices, operating costs (including energy costs) and the absence of significant changes in operations – specifically, the stability of energy supplies, the absence of restrictions imposed by the insolvency administrator at Ferrexpo Poltava Mining, and the absence of adverse final rulings in court and administrative proceedings).

Ferrexpo is continuing its preparations to raise at least $100 million through a rights issue – the company continues to regard this step as the most viable solution for securing funding within the required timeframe. However, there is no guarantee that it will be successfully implemented.

As noted in the statement, if the issues of VAT refunds and raising funds are not resolved in the near future, this could have significant negative consequences for the group’s operations.

Should a decision be taken to carry out a further share issue, Ferrexpo will issue a separate announcement setting out the full terms of the fundraising. The production report for the second quarter is scheduled for 15 July.

As a reminder, Ferrexpo had previously announced the suspension of the listing and trading of its shares on the London Stock Exchange with effect from 1 May this year.

As reported by GMK Center, in the first quarter of this year, the company reduced its iron ore production by 72% year-on-year to 592.75 thousand tonnes. Compared with the previous quarter, the figure fell by 45%.

In January–March, the company’s production activities were largely suspended due to Russian attacks on Ukraine’s energy sector. A limited resumption of operations at reduced capacity levels took place only at the end of February.