MOSCOW, February 20 (RIA Novosti) – Russian metals and mining giant Mechel has sold all five of its metals factories in Romania for a symbolic price of 230 Romanian leus ($70), Mechel said late on Tuesday.
“Mechel has signed a series of agreements for the disposal of its Romanian steel assets - 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 group, Romania’s Invest Nikarom SRL. The transaction terms will result in Mechel receiving a nominal contribution,” Mechel said in a statement.
Mechel notified investors in November 2012 that production at its Romanian steelmaking facilities had been suspended due to unfavorable prices on European steel markets linked to rising ferrous scrap prices and weak demand for finished products.
“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,” Mechel CEO Yevgeny Mikhel said.
“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 total debt stood at $9.7 billion as of September 30, 2012.
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