Mechel Reports Disposal of Mechel Bluestone
February 18 2015 - 9:20AM
Mechel OAO (MICEX:MTLR) (NYSE:MTL),
one of
the leading Russian mining and metals companies, has closed a deal
on the disposal of Mechel Bluestone, Inc. (Delaware, USA),
including its mining operations, to a company owned by the Justice
family.
The deal includes:
- an immediate cash payment of $5 million
- royalty payments on coal mined and sold in an amount of $3.00
per ton
- portion of any future sale of the company and/or its assets of
12.5% of the sale price if within five years of transaction close
or 10% of the sale price after year five, but before year ten.
In addition, as part of the transaction, the parties agreed to
terminate all claims against each other, including their
unresolved dispute related to the calculation of a contingent
payment obligation arising out of the 2009 transaction in which
Mechel obtained the Bluestone assets from Justice.
"As part of the revised development strategy we continue
disposing of non-core and non-strategic assets. With the market
situation being what it is, mining at Mechel Bluestone's mines and
open pits is not profitable. The company's average annual net loss
since 2012 was around $60 million. Selling Mechel Bluestone will
not only enable us to avoid these losses, but also takes some $140
million of liabilities off the Group's balance sheet and allows us
to avoid over $160 million worth of legal risks. The sale will
allow us to focus the freed cash flows on servicing the company's
debt," Mechel OAO's Chief Executive Officer Oleg Korzhov
commented.
Mechel is an international mining and steel company which
employs over 70,000 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 economic conditions and litigation, including
claims not yet asserted.
CONTACT: Mechel OAO
Ekaterina Videman
Tel: + 7 495 221-88-88
ekaterina.videman@mechel.com
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