MOSCOW, Feb. 19, 2013 (GLOBE NEWSWIRE) -- Mechel OAO (NYSE:MTL) , one of the leading Russian mining and metals companies, reports that it has disposed of its Romanian steel assets.
Mechel OAO transferred the shares of all its Romanian assets to the buyer, Romania's Invest Nikarom SRL. The sum of the transaction is for a nominal amount of 230 Romanian lei (some 70 US dollars). Invest Nikarom SRL acquired Mechel Group's five assets — Ductil Steel Mechel, Campia Turzii S.A., Mechel Targoviste S.A., Mechel East Europe Metallurgical Division SRL, Laminorul S.A.
In November 2012, 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 was 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 winter. The disposal of Romanian assets is fully aligned with Mechel OAO's revised strategy aimed at development of its core businesses, particularly consolidating the group's leading position as a metallurgical coal producer.Mechel OAO's Chief Executive Officer Evgeny Mikhel commented: "This transaction is yet another step in implementing Mechel OAO's revised strategy aimed at developing our key production lines and disposal of non-core businesses. We have earlier announced our intention to exit the European steel production, which is chronically loss-making both currently and in the foreseeable future. Not only does it have a negative impact on the Group's financial results and cash flow, but also increases its alternative costs, which we cannot afford as we invest in such promising projects as the 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."