Metallurgical group Mechel has sold plants in Romania

Russian metallurgical group Mechel has sold numerous assets, including plants held in Romania, and wants to gain profit, says "Kommersant", 150 million dollars for the wineries from Târgovişte, Plain City, Brăila and Buzău, wants to reduce the debts and to fund a mining project.

Mechel management decision was taken Saturday, announced Wednesday, but it was somehow predictable, maybe not in the proportions in which has been announced, as is its base the new strategy of the group, still approved in May.

This strategy aims at improving financial indicators, given that the group's debt to creditor banks is of 9.4 billion dollars and the increase of the shares value .

Mechel also wants to focus, says the official communiqué, on extractions and metallurgical activities with full cycle, with emphasis on long bars and products with high added value.

The list of the enterprises outside Russia removed from sale and includes four active in Romania: Mechel Targoviste, Mechel Câmpia Turzii, Ductil Steel Buzău and representation from Oţelu Roşu, Laminorul Brăila, but will also be sold and virtually all assets in the EU and CIS countries: Bulgaria, Ukraine, Kazakhstan, the United Kingdom and Lithuania and a service company, Mechel Service Global.

But most Mechel funds plans to obtain from the sale of 25 per cent of the shares of its mining subsidiary, Mechel Mining, which experts consider to be one of the most valuable of company assets.

Mechel sources cited by Kommersant, state that the Group has already begun negotiations with potential buyers without revealing the names, nor how they intend to achieve and stating, however, that has not been fixed yet, a term for the sale of these assets.

Debt of 9.4 billion dollars

Mechel is one of the largest groups in Russia in the field of mining and metallurgy, but ots debts of 9.4 billion dollar forces this company to sell assets of Europe in terms of dramatic market downturn of ores and steels and of the obligation to pay off even in this year of 2.7 billion dollars.

In addition, Mechel wants to accelerate the exploitation of a very large ore body of coking coal from Yakutia, in Eastern Siberia, the largest in Russia actually, with confirmed reserves of up to 2.7 billion tons, but estimated at 30 billions.

As regards the situation of the assets in Romania, Russian experts believe that, if the main difficulty will be selling plants in Europe, working in the loss, the biggest problem will be the sale of assets in Romania, which are considered to be the least valuable in the current market situation.

Daily newspaper "Vedomosti" mentions, in turn, that after the outbreak of the crisis in the euro area, the Mechel Plants from Romania periodically interrupted the work, and the Bucharest authorities have warned that they would seek other investors for these businesses.

An official Mechel, which, subjected to anonymity, gave few details to "Kommersant", says that the current task of the enterprises put up for sale, so those in Romania, will depend on their results on the market.

If these results will be negative, production will be reduced to minimize financial losses, and the businesses that will have positive results Mechel will continue to work, said that source, but without going into details.

But, as "Vedomosti" writes, it seems that Mechel is decided to sell all these assets, even at symbolic prices, and to get rid of their debts, amounted to 500 million dollars.

Given that Mechel drastically reduces its activity, basically not just in the EU and the CIS, but also in Russia, to focus on other directions, on other activities, there is no guarantee that these assets could be moved to the Republic of Moldova.

It is known that in the Republic of Moldova, the Transnistrian region, there is an important iron plant , owned by one of the Russian tycoons Alisher Usmanov, perhaps he could be interested in acquiring a part of Mechel's assets which the Russian group outlaws for sale.


Translated by
Denisse-Meda Bucura