English
The "Mechel" Târgovişte metallurgic plant has filed for insolvency on Tuesday, for reorganization, after it was sold, together with the other assets which the Group had in Romania, to "Invest Nikarom" Bucureşti, in exchange for an amount of approximately 50 Euros.
In a press release sent to the Bucharest Stock Exchange yesterday (BSE), the representatives of the plant said: "We want to mention that our goal is protecting the interests of the company and the relaunch of the activity on solid foundations based on a reorganization plan, which we are convinced will lead to making the company viable. With the help of < Invest Nikarom >, the company which indirectly holds the majority stake in the company, efforts will be made to resume operation at < Mechel > Târgovişte în under conditions of economic efficiency".
The insolvency file was submitted to the Court of Dâmboviţa.
After the first nine months of last year, the plant reported debts of 613 million lei, for a turnover of 773.2 million lei, down almost 10% compared to the similar period of last year. "Mechel" Târgovişte was seeing losses at the end of Q3, of 78 million lei.
Over the last few years, "Mechel" România had several announcements about the intention to take out loans from banks such as "ING Bank" or "UniCredit Ţiriac Bank", for working capital.
In the summer of 2011, the representatives of "Mechel" were saying that they intend to attract loans from four banking groups, with a total amount of 173.5 million Euros, for the Romanian assets, in order to finance working capital and to refinance some previously taken out loans.
The company also wanted to take out another loan of 30 million dollars from "Bancpost".
Last year, the group announced that it took out a loan of 50 million Euros from Erste Group Bank and BCR. The loan agreement was of the "multiborrower multicurrency" type, to finance the working capital, with collateral (stocks and receivables) and with a letter of guarantee from the parent company - "Mechel OAO".
• Ponta: "The crisis that the company is in is a reality that neither us, nor other countries have been able to fight"
Prime Minister Victor Ponta yesterday promised that the Government would support any new investor that would express interest in saving the Mechel plants in Romania, and he stressed: "< Mechel > has not only closed its Romanian operations, but in about 12 countries. Romania is also affected. Everything that depends on the Romanian state, to help a new investor, we will do, but we are talking about a private investment. We have checked whether all of the privatization conditions have been honored and they have been, and the crisis that the company is in is a reality that neither us, nor other countries have been able to fight in any other way. We will grant any type of support to a new investor which would save those plants which belonged to < Mechel >".
The prime-minister said, quoted by Mediafax, that "Mechel" is a private company "that can sell for two billion, or for two lei, because it is private, it is not state-owned": "I can't intervene, just like I can't tell anybody, if they want to sell their car, how much to ask for it. In reality, what is happening to the plants in Romania, and in the other countries is a type of reorganization which the Romanian state has absolutely no control over, since we are dealing with a Russian company".
Last year, Victor Ponta made some statements concerning the issues with the plant of Câmpia Turzii, asking Daniel Chiţoiu, the minister of the Economy, at the time, to "quickly" check the manner in which the commitments undertaken through the contract for the privatization of "Mechel" Câmpia Turzii had been honored and said that we are seeing another " < Nokia >- style example of success".
Ionel Blănculescu, the executive secretary of the Advisory Council for the Business Environment, considers that the "aid" promised by the prime minister for the investors of "Mechel" in fact represents a promise to change the aid scheme for the energy sector.
Blănculescu said: "The government has changed his vision of the aid scheme approved for the energy sector, after it realized that all of the energy costs for the energy sector fall on the shoulders of the industry. Thus, changing the legislative framework of the sector, comes to the aid of all the investors in the industry, not just < Mechel >".
The company which acquired the five Romanian assets - "Mechel East Europe Metallurgical Division" SRL and the "Ductil Steel" Buzău, "Mechel" Câmpia Turzii, "Mechel" Târgovişte, "Laminorul Brăila" plant - is controlled by two Russian citizens - Svetlana Chumakova and Victor Chumakov, the parents of Olga Chumakova - the head of the representative office of "Mechel" in Romania.
Olga Chumakova declined to comment on the deal yesterday as well, and said that she would issue a press release soon.
The assets owned by the Russian corporation in Romania had losses of 2.4 billion Rubles (approximately 60 million Euros) budgeted for this year, said Evgeny Mikhel, the general manager of "Mechel", in the press release announcing the sale: "This deal represents another step towards the implementation of the revised strategy of < Mechel >, for the purpose of developing the production lines and to drop the assets which do not fit within the base profile of the Group. We have previously announced the intention to exit the steel manufacturing segment in Europe, which has been constantly producing losses in the present, as well as being expected to do so in the near future. Not only does this have a negative impact on the financial results and the cashflows of the group, but it also increases alternative costs, which we can't afford to have happen when we are investing in promising mining projects (...) Considering the loss of 2.4 billion Rubles planned for the Romanian assets in 2013, this deal will have significant financial effect for our shareholders. The cashflow we have thus released will be used for our operational activities, as well as to reduce the company's leverage".
The company has a share capital of 99,979 lei and operates in the business of machinery and equipment trading.
• "Mechel" has transferred the plant of Târgovişte to "Mazur Investments Limited", six days ago
The plant of Târgovişte has been acquired by "Mazur Investments Limited", which obtained ownership of 86.6034% of the share capital of "Mechel" Târgovişte through a share capital increase performed by "Mechel International Holdings" GmbH, through a contribution in kind, on February 15th, 2013, according to a press release sent to the Bucharest Stock Exchange on February 19th only, the same day that the announcement concerning the sale of the five assets was made.
The press release shows that "Mazur Investments Limited" is a company registered in Cyprus.
The representatives of the Board of Directors of "Mechel" Târgovişte replaced Yury Gushchin from the position of Chairman of the Board, with Russian Oleg Shvedakov.
The Special Steels plant of Târgovişte was acquired in 2002 by "Conares Trading", registered in Switzerland, which later became a part of the Russian metallurgical group "Mechel".
Production at Târgovişte has been halted since last year and is still suspended, as the employees are in technical unemployment.
• Blănculescu: "< Mechel > has acted according to the Russian philosophy of doing business"
What is happening now at "Mechel" means a relocation of activity, considers Ionel Blănculescu, who considers that the plants of "Mechel" don't have a future anymore in Romania, because they have no market for their products.
"From my point of view, < Mechel > is history. The economic situation all over Europe leads to the disappearance of the market for the products made by these plants. We are no longer competitive on the European market".
Ionel Blănculescu said: < Mechel > has acted according to the Russian philosophy of doing business". "The Russian philosophy of doing business involves jumping from one type of business to the next. It would seem that they are now focusing on a major business in the mineral resources sector and in order to do that they have sold a number of assets in various countries".
Among other things, "Mechel OAO" is developing a project of 2.86 billion dollars, which involves the exploitation of the deposit of metallurgical coal of Elga and the construction of the railroad which will connect this deposit to the Baikalo-Amurskaia main, of Russia. This project is strategic for and a priority for "Mechel", as it is one of the biggest programs implemented in Russia by a private company.
The mining project located in the SE part of the Yakutsk region in Russia is also mentioned in the decision of the Board of Directors of "Mechel OAO" which took place on September 21st, 2012, where, among other things, the decision to sell several of the assets owned by the Group was made.
In autumn last winter, "Mechel" temporarily halted production at the plants it owned in Romania, "due to the unfavorable prices on the European steel markets, tied to the increase in the price for scrap metal and low demand for finished products", according to a press release of the company.
The group also needs liquidity to reduce its debt, which amount to over 9 billion Euros.
"Mechel" has experienced difficulties in repaying its loans, as well as the massive drop in prices on the Moscow Stock Exchange, which also led to its rating being lowered by HSBC, "Goldman Sachs", "Societe Generale", "Moody's" and "Credit Suisse", according to the foreign media.
Thus, "Mechel" received the rating of "not-recommended investment".
The Russian corporation bought the plants from the Romanian state in 2003, some of the commitments made included the making of technological investments of 16.5 million Euros.
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