New owners of Mechel's Romanian factories ask for insolvency of Targoviste unit

Invest Nikarom, the company which recently took over Mechel's four factories in Romania for the symbolic amount of USD 70, has asked for the reorganization of Mechel Targoviste, the largest of the four, according to Ziarul Financiar. Should the four factories be eventually closed down, around 5,000 people will lose their jobs. The buyer is controlled by Victor Chumakov and Svet­lana Chu­makova, both of Russian nationality. The two are reportedly the parents of Olga Chu­makova, the head of Mechel's office in Romania, who said in autumn last year that the factories will not be closed down. The company had a turnover of EUR 350,000 in 2011 and a loss of EUR 28,000. Meanwhile, the four factories posted a turnover of EUR 874 million in 2011, and a cumulative loss of EUR 121.6 million. The factories also have a debt of some EUR 570 million, mostly to companies in the group. Romanian officials are yet to issue a statement on the situation of the four factories, whose closure would have an impact on local economies in the four cities, as well as on the national economy. The four factories, Ductil Steel S.A., Campia Turzii S.A., Mechel Targoviste S.A., and Laminorul S.A were temporarily closed down in fall 2012, because of the unfavorable prices on European markets, with the growing price of scrap metal and the low demand for final products. The sale is in line with Mechel's strategy to exit the European metalurgic sector, which is suffering chronic losses. “With a significant loss for the Romanian companies in 2013 estimated at 2.4 billion Russian roubles (around USD 80 million), the current transaction will have a positive financial impact on our shareholders. The freed cashflow will be re-directed to the operational activity and to reducing the company's debt,” said Evgeny Mikhel, general manager of Mechel. editor@romania-insider.com