) has entered into an agreement to sell its ferroalloys assets to
Turkey-based ferroalloys company Yildirim Group for $425 million.
Mechel will dispose Voskhod Mining Plant in Khromtau, Kazakhstan
and Tikhvin Ferroalloy Plant in Tikhvin, Leningrad Region,
Russia. The Tikhvin Plant produces up to 120,000 tons per annum
of high-carbon ferrochrome that is used to produce stainless
steel. The Voskhod Plant is a modern chrome ore mine that
produces chrome ore concentrate.
Mechel plans to utilize the proceeds from the deal to deleverage
and continue to finance its priority development projects. The
divestiture of the assets is a strategic move by Mechel, in sync
with the ongoing restructuring assets program that was approved
by its Board earlier.
Yildirim Group will pay the total amount for the transaction to
Mechel immediately after the closure of the deal. However, the
deal's closure depends on all necessary approval required from
Kazakh and Russian regulatory authorities and from corporate
management agencies of both the companies.
Societe Generale Corporate and Investment Bank, ING Bank and
Dechert LLP are the advisors to Mechel for this transaction.
Following the announcement, Mechel's shares rose 4.6% to close at
$2.97 on Aug 1.
The acquisition will boost Yildirim Group's production
capacity to a world-class level at 2.5 million tons per annum.
Yildirim Group is the owner of production plants at Eti Krom in
Turkey and Vargon Alloys AB in Sweden. With the addition of
Mechel's ferroalloys assets, Yildirim Group will place itself
among the prominent players in high-carbon, high-quality
Mechel is a leading domestic steel and coal producer with a
strong position in key businesses, including production of
specialty steel and alloys. The company has the largest coal
reserve base in Russia and is mainly focusing on growth and
Mechel retains a Zacks Rank #4 (Sell).
Other companies in the steel industry with favorable Zacks
Nippon Steel & Sumitomo Metal Corp.
Kobe Steel Ltd.
). While Nippon Steel holds a Zacks Rank #1 (Strong Buy), both
Kobe Steel and Ternium retain a Zacks Rank #2 (Buy).
KOBE STEEL-ADR (KBSTY): Get Free Report
MECHEL OAO ADS (MTL): Free Stock Analysis
NIPPON STEEL CP (NSSMY): Get Free Report
TERNIUM SA-ADR (TX): Free Stock Analysis
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