After Romanian units sale announcement, Mechel promises continued production, but some layoffs in sight

The upcoming and recently announced sale of Mechel's production units in Romania will not affect production, the company said in a statement. “The sale decision of these assets does not entail a permanent halt on production. Moreover, to avoid closing down the the plants, Mechel will make efforts to keep them functional. Mechel is interested in ensuring maximum capital value for its assets in Romania,” the company said in a statement. Mechel had to take some measures to optimize production and lower costs, such as temporarily suspend work in some sections and lay off some of the employees. “Most of the employees will be kept. All laid off employees will be compensated according to the law and their collective contracts,” the statement reads.

Mechel will sell its factories Mechel Câmpia Turzii, Ductil Steel Buzău, Ductil Steel Oțelu Roșu, Mechel Târgoviste and Laminorul Brăila in Romania. “At Mechel Târgovişte, Ductil Steel Buzău and Laminorul Brăila all production sections will work according to the agreed schedule. Mechel Campia Turzii will only have the steel section will work, while Ductil Steel Oţelu Roşu will work under normal conditions, said Yurii Guschin, then head of Mechel's East European division. The company says it will negotiate the sale with potential investors who are interested in keeping the integrity of the factories and developing Mechel's local units. Russian group Mechel has put all of its companies in Romania up for sale, in an assets restructuring move which also includes sales of holdings in other countries. Mechel announced the move after its board of directors meeting earlier this week, but did not give any specific details about the sale. According to Russian media, Mechel is asking for some USD 150 million for the four subsidiaries it has in Romania. Mechel Targoviste has an asking price of USD 46 million, according to Kommsersant.ru, while Ductil Steel Buzau, USD 39 million. The Russian company bought the latter in 2008 for some USD 198 million. Mechel Campia Turzii and Laminorul Braila have similar asking prices, USD 33 million and USD 32 million. The numbers were not yet confirmed or denied by the company. Subsidiaries in Ukraine, Russia, Kazakhstan, Lithuania and Bulgaria are also up for sale. Mechel’s turnover in Romania stood at EUR 1 billion last year, but the lack of orders impacted its local business. Mechel makes steel products in Romania, where it employed some 7,500 people at the end of 2011. Corina Chirileasa, corina@romania-insider.com (photo source: sxc.hu)