OJSC Mechel signed a series of agreements for the disposal of its Romanian steel assets (namely, Ductil Steel Mechel, Campia Turzii S.A., Mechel Targoviste S.A., Mechel East Europe Metallurgical Division SRL, Laminorul S.A.) to a privately held Romanian corporate group Romania's Invest Nikarom SRL. The transaction terms assume a nominal consideration for Mechel, the Russian company informed.
Mechel notified investors in November 2012 that due to unfavorable prices in European steel markets linked to rising ferrous scrap prices and weak demand for finished products, production at Mechel's Romanian steelmaking facilities were temporarily halted. While production at these steelmaking facilities was temporarily suspended, all necessary measures were undertaken to retain the affected facilities' operational capability and to conduct maintenance works in an orderly manner.
The disposal of the Romanian steel assets is fully aligned with Mechel's strategy aimed at development of its core businesses, particularly consolidating the group's leading position as a metallurgical coal producer.
"This transaction is yet another step in implementing Mechel's revised strategy aimed at focusing on our key production lines and disposal of non-core businesses. We have earlier announced our intention to exit steel production in Europe which is chronically loss-making both currently and, in our view, the foreseeable future. Our Romanian steel assets have had a negative impact on the Group's financial results and cash flow for some period of time. We are strongly committed to concentrating on directing our resources on those projects that offer the greatest return to our shareholders, i.e. Elga coal deposit and the universal rolling mill. With the Romanian assets' planned loss of 2.4 billion rubles in 2013, this transaction will have a marked financial effect for our shareholders. The freed cash flow will be used for operational activities as well as decreasing the company's leverage," Mechel's CEO Evgeny Mikhel was quoted as saying in the company's statement.
Mechel (tax number: 7703370008) is one of the leading Russian companies. The company's profile covers 4 business segments: mining, metallurgical, ferroalloy industry and power engineering. The company unites manufacturers of coal, iron-ore concentrate, nickel, steel, rolled products, high-added value products, thermal and electric energy. Mechel's goods are sold in Russia and worldwide.
Net loss of OJSC Mechel as per US GAAP for H1 2012 was $605.004 million against a profit of $501.002 million for H1 2011. Revenue decreased by 5.81% to $6.035 billion from $6.407 billion. Operating loss was $156.58 million against a profit of $924.685 million. Adjusted EBITDA decreased by 28% to $848.848 million. EBITDA margin was 14.06% against 18.4% the year before.
Net profit (RAS) of OJSC Mechel for January-September 2012 was RUB 22.723 billion against a loss of RUB 13.996 billion for 9 months 2011. Revenue increased 3.23-fold to RUB 25.085 billion from RUB 7.764 billion, sales profit 4.04-fold to RUB 24.37 billion from RUB 6.026 billion, pre-tax profit was RUB 22.047 billion against a loss of RUB 14.044 billion.
"AK&M", 21.02.2013
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