Mechel announces closure of the transaction for the acquisition of 100% of the shares of Donetsk Electrometallurgical Plant (DEMZ AO).
On December 23rd 2011, Mechel completed the acquisition of 100% of Donetsk Electrometallurgical Plant.
The acquisition was approved at Mechel OAO's annual shareholders' meeting and by the Mechel's Board of Directors.
The acquisition is valued at USD 537 million.
Payment for DEMZ AO's shares will be made in installments over 7 years. At the time of Mechel's annual shareholders' meeting, payment was expected to be paid in installments over 4 years, but over the course of completing the acquisition, the term was extended by 3 years without increasing the total consideration.
DEMZ is one of Ukraine's most modern steelmaking plants with an annual capacity of over 1 million tonnes. The plant focuses on the production of continuously cast billets as well as rolls of specialty steels, including thermally treated. The enterprise has a firm market standing as a producer of high quality rolls, resuming production of large diameter specialty steel pipe.
The plant's electric furnace smelting facilities are currently working at their full capacity, producing up to 90,000 tonnes of steel per month. In 2011, steel production is expected to total over 1 million tonnes.
Production of hot rolled products is planned this year to top 145,000 tonnes. Equipment at the plant's rolling mill enables it to produce rolls using various types of thermal treatment, including hardening and tempering, annealing and normalization.
DEMZ's quality management system is compliant with the international ISO 9001:2008 standard as certified by Lloyd's Register Quality Assurance, while the ecological management system is compliant with the ISO 14001:2004 standard as certified by TUV NORD CERT.
Mr Igor Zyuzin chairman of Mechel said “Acquisition of Donetsk Electrometallurgical Plant is a logical step for the company as we pursue our strong partnership and investment ties with the Ukrainian plant. This is a new level of development for Mechel Group's steel division, aimed at increasing the Group's total production volume and, which is particularly important, the share of high margin products in the group's product portfolio.”
