May 22, 2014

Russian mining and steel group "Mechel" expects closing the transaction for the sale of PJSC "Donetsk Electro-Metallurgical Plant" (DEMP) until 31 July 2014. On December 7, 2013 the "Mechel" group received an offer from a third party for the sale of DEMP for USD 80 million, according to the website of the US Securities and Exchange Commission.

At the same time, according to the agreements reached, USD 20 million will be transferred on the day of sale, and the remaining USD 60 million will be paid within two years from the date of sale. Also, the buyer will reimburse the expenses on the operating activity from January 1, 2014. It was reported earlier that "Mechel" has agreed with its former owner Vadim Varshavskiy on selling DEMP for EUR 2 thousand and on redemption by Vadim Varshavskiy of DEMP’s debt to the "Mechel" group of up to USD 81 million. Operational management of the plant was transferred to Vadim Varshavskiy, and the deal was planned to be closed in late 2013. However, the deal was scuttled because the buyer did not find the necessary sum to pay to the "Mechel" group.

In 2011 "Mechel" acquired DEMP from "Alfa-Group" affiliates for USD 537 million that "Mechel" had to pay in equal tranches until December 2018.

PJSC "Donetsk Electro-Metallurgical Plant" is a modern iron and steel plant, built on the principle of mini-plant with incomplete metallurgical cycle. It is composed of an electric furnace shop, a blooming mill and a drop-hammer plant. Production capacity of DEMP allows to melt over 1 million tons of steel per year.

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