Mechel’s managing board has recently decided to take several restructuring measures to improve financial performance and one of the measures targets the sale of the five Romanian plants Mechel Targoviste, Mechel Campia Turzii, Laminorul Braila, Ductil Steel Otelu Rosu and Ductil Steel Buzau. According to Russian newspaper kommersant.ru, the steelmaker seeks to obtain $150 million from divesting its Romanian units.
According to the statement, the decision to sell the five Romanian plants does not entail a permanent halt in production and Mechel will strive to keep the plants open and operating. The statement reads that Mechel group had to take a series of measures to optimize production and cut costs. However, most employees will be kept and all sacked employees will receive compensatory payments in accordance with the valid legislation and the collective labor contracts. It also said all production capacities will still be running at Mechel Targoviste, Ductil Steel Buzau and Laminorul Braila in accordance with the approved program.
Mechel announced it would sell its Romanian business as part of a larger restructuring strategy to improve financial performance and increase market value. The Russian company also plans to sell several units in Ukraine, the UK, Lithuania, Kazakhstan, Russia and Bulgaria, as well as its international subsidiary Mechel Service Global B.V., excepting Mechel Service Russia.
“We took an important practical step in implementing the Group’s renewed strategy. The decisions [to divest several assets] are fully in line with Mechel’s declared course on improving our operational efficiency and will enable us to focus on priority business areas,” Mechel OAO’s Chief Executive Officer Yevgeny Mikhel said.
Last week, the Russian steelmaker announced it would temporarily halt production at its plant in Otelu Rosu, following a recent slowdown in production at another Romanian unit in Campia Turzii on the backdrop of weakening demand.