Mechel Announces Signing Agreement for Disposal of Donetsk
MOSCOW, Russia, Aug. 20, 2013 (GLOBE NEWSWIRE) -- Mechel OAO (NYSE:MTL), one
of the leading Russian mining and metals companies, announces signing an
agreement for the disposal of Donetsk Electrometallurgical Plant AO.
Mechel announces signing an agreement with businessman Vadim Varshavsky for
the disposal of 100% shares of Daveze Limited, which in its turn owns 100%
shares of Donetsk Electrometallurgical Plant, for a nominal sum of 2,000 euro.
The buyer also assumes the obligation to ensure repayment of DEMZ AO's debt to
Mechel Group for a sum of up to 81 million US dollars depending on the time of
the repayment. Operational management of the plant will be transferred to
Vadim Varshavsky shortly. The deal is due to be closed in late 2013.
"In the current macroeconomic situation we see no further perspective for the
plant's development within Mechel Group, as we do not foresee significant
improvement in the market where the plant operates over the next few years.
This deal also helps decrease country risks for Mechel due to the specifics of
doing business in Ukraine, which are often weighed down with non-market
factors. Moreover, due to high scrap prices, which are partly due to several
local producers' monopoly status, production at the plant has become
unprofitable and was halted in November 2012.
"In this year's first quarter alone DEMZ's net loss amounted to 16 million US
dollars by US GAAP, with 50 million US dollars loss in 2012.
"Disposal of unprofitable assets will enable us to significantly improve our
operational cash flows and focus on our priority businesses — mining and high
value-added steel products," Mechel OAO's Chief Executive Officer Evgeny
Mechel is an international mining and steel company which employs over 80,000
people. Its products are marketed in Europe, Asia, North and South America,
Africa. Mechel unites producers of coal, iron ore concentrate, steel, rolled
products, ferroalloys, heat and electric power. All of its enterprises work in
a single production chain, from raw materials to high value-added products.
Some of the information in this press release may contain projections or other
forward-looking statements regarding future events or the future financial
performance of Mechel, as defined in the safe harbor provisions of the U.S.
Private Securities Litigation Reform Act of 1995. We wish to caution you that
these statements are only predictions and that actual events or results may
differ materially. We do not intend to update these statements. We refer you
to the documents Mechel files from time to time with the U.S. Securities and
Exchange Commission, including our Form 20-F. These documents contain and
identify important factors, including those contained in the section captioned
"Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in
our Form 20-F, that could cause the actual results to differ materially from
those contained in our projections or forward-looking statements, including,
among others, the achievement of anticipated levels of profitability, growth,
cost and synergy of our recent acquisitions, the impact of competitive
pricing, the ability to obtain necessary regulatory approvals and licenses,
the impact of developments in the Russian economic, political and legal
environment, volatility in stock markets or in the price of our shares or
ADRs, financial risk management and the impact of general business and global
CONTACT: Mechel OAO
Tel: + 7 495 221 88 88
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