Ferrexpo's logistics purchase

Iron ore producer Ferrexpo is buying inland waterway transport company Helogistics for €28.5m, which is equivalent to net asset value. Earlier this year, Ferrexpo provided a €6m working capital loan to a subsidiary of Helogistics so it knows the business reasonably well. Helogistics is one of the largest companies operating on the Danube River and it operates 253 vessels. It transports iron ore pellets, including ones produced in the Ukraine by Ferrexpo, and other goods along the Danube and Rhine rivers to locations in Europe. Ferrexpo is a large customer with 504,000 tonnes of its pellets transported by Helogistics in 2009 and 575,000 tonnes so far in 2010. The purchase adds to Ferrexpo's existing logistics network in Europe. Helogistics reported EBITDA of €700,000 in 2009. Helogistics debt with a face value of €72.1m is included in the purchase price. Ferrexpo is buying Helogistics from East Point Holdings, where AIM-quoted Reconstruction Capital II is a 42% shareholder. East Point guaranteed €40m of the Helogistics debt and it is paying €14.8m to the lenders - €8m on completion and €6.8m over five years. Reconstruction Capital II is buying a 5.5% direct stake in East Point's agribusiness for €2.2m to help finance East Point's payments. Ferrexpo