Russia’s Mechel sells Romanian steel units for EUR 52

Newsroom 20/02/2013 | 11:34

Mechel, the Russian steel and metallurgical coal producer, sold all six units it owns in Romania for EUR 52, as it aims to exit the loss making steel production and develop its coal business.

The transaction includes the steel assets of Ducting Steel Mechel, Campia Turzii, Mechel Targoviste, Mechel East Europe Metallurgical Division, and Laminorul. The plants were sold to Bucharest-based firm Invest Nikarom, which is controlled by two Russians, according to media reports.

Evgeny Mikhel, general director of Mechel, said: “This transaction is yet another step in implementing Mechel OAO’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.”

The director said the Romanian steel units are set to generate losses worth EUR 60 million this year. The company will use the additional cash-flow for operational activities and to cut its leverage.

Mechel’s steel production was halted in November due to plummeting prices on steel markets and subdued demand.

Ovidiu Posirca

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