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#Ti producer VSMPO-Avisma plans listing to fund expansion

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June 01 2005

Russian titanium producer Verkhnaya Salda Metallurgical Production Assn (VSMPO) will sell 20 percent of its equity through American depository shares once its integration with titanium sponge and magnesium producer Avisma is complete.
"Our merger into a single corporation will be completed within the next few weeks," said Vyacheslav Bresht, board chairman of VSMPO, the world's largest titanium producer.
"Then we'll embark on preparing a depository receipts programme with a view to launching it at the beginning of 2006."
"It is quite an attractive stock for foreign investors," an industry analyst in Moscow said. "Meeting stringent listing requirements will further enhance its appeal to them and help issuers raise capital for expanding production."
To expand capacity, the merged VSMPO-Avisma intends to explore acquisition opportunities abroad. "Mills in the US and former Soviet states are already on our radar screen," said Bresht.
VSMPO-Avisma plans to lift production by 20 percent to 24,340 tonnes in 2005. Exports will be 20,000 tonnes, almost 25 percent higher than in 2004.
In the first quarter of this year, VSMPO-Avisma produced 5,300 tonnes of titanium, up 12.6 percent year-on-year.
"Market conditions are improving as is our order backlog," said Bresht. "But nobody expected demand to pick up that fast."
He highlighted the increased orders for titanium structure sections from prime customers in the aerospace sector. In the first quarter, the US accounted for half of the company's exports, up from 33 percent a year ago. It was followed by Taiwan (15.8 percent), Canada (9.5 percent) and Germany (7.6 percent).
VSMPO and Avisma already have consolidated business records and management teams with Vladislav Tetyukhin acting as ceo for both companies.

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