Wednesday, April 9, 2008

Reuters: Mechel buys Romania's Ductil Steel for $221 mln

MOSCOW, April 8 - Mechel , Russia's sixth-largest steel maker, has expanded its presence in Romania by acquiring rebar and wire rod producer Ductil Steel for 142 million euros , the company said on Tuesday.

New York-listed Mechel said in a statement it had agreed to purchase 100 percent of Ductil, which last year produced 340,000 tonnes of crude steel. The purchase price included 180,000 ordinary shares from a company called Lakewind Ltd, it said.

Mechel, controlled by billionaire chief executive Igor Zyuzin, already owns two plants in Romania -- Mechel Targoviste and Mechel Campia Turzii. The acquisition of Ductil gives it access to plants in Buzau in the east of the country and Otelu Rosu in the west.

Billets from the Otelu Rosu plant are either transferred to the Burzau plant and rolled into finished products, or sold to third parties both in Romania and abroad.

"The integration of Ductil Steel's production and marketing facilities will allow Mechel to further develop its steel business, particularly in Romania and eastern Europe," said Vladimir Polin, chief executive of Mechel's management company.

Ductil Steel produced about 320,000 tonnes of steel billet last year, Mechel said, as well as 180,000 tonnes of rebars, 105,000 tonnes of wire, 68,000 tonnes of wire rod and 48,000 tonnes of wire mesh.

Mechel, also Russia's largest coking coal miner, has earmarked $2.7 billion by 2011 to increase steel production by 26 percent and improve its coal, iron ore and nickel mining operations. The company has also been on an acquisition spree recently. In the last year it has bought the Bratsk Ferro-Alloy Plant and large coal deposits in the Russian Far East, as well as agreeing the $1.5 billion acquisition of ferro-chrome producer Oriel Resources .

Zyuzin has said he plans to spin off Mechel's mining assets and sell a stake of at least 20 percent in a new company he would value at $20 billion.

Mechel also plans to raise $1.5 billion by July 15 placing preferred shares, a banking source told Reuters on Monday.

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