NLMK Group brings in strategic investor for NLMK Europe

NLMK is proceeding with the restructuring of its European assets to further improve efficiency and optimize costs with an investment by SOGEPA (Société Wallonne de Gestion et de Participations S.A.), a Belgian state-owned company, in NLMK Europe.

The restructuring programme for NLMK’s European assets was initiated in 2008 as part of a joint venture with Duferco Group. In 2011, pig iron, steel, and long product operations were carved out from NLMK’s European assets. In March 2013, the next step of the restructuring programme was completed with an agreement signed with trade unions for the reorganization of the NLMK La Louviere site. This agreement included, among other things, a plan to reduce staff numbers by 30%. These and other efficiency improvement measures have already led to a reduction in fixed costs of almost 50%.

In a further phase of restructuring announced today, SOGEPA has acquired a 20.5% stake in NLMK Belgium Holdings S.A. (NBH), which comprises NLMK Europe’s operating and trading companies, excluding NLMK Dansteel, for a purchase price of EUR 91.1 million. The agreement provides NLMK Group and SOGEPA with respective call and put options over SOGEPA’s shares commencing on 31 December 2015. In addition, SOGEPA will be granted certain governance rights over NBH and its subsidiaries, and key management decisions will be taken jointly by NLMK and SOGEPA. The Board of NBH will be comprised of four representatives of NLMK Group and two representatives of SOGEPA.

Oleg Bagrin, NLMK Group CEO, said: “This is the next logical step in our ongoing efforts to restructure the production assets of our European division. Investment in NLMK Europe by a Belgian state-owned company evidences the commitment of the Belgian government to participate in the restructuring process and our cost optimization programme. It also supports credit standing of these assets and the stability of relationships with social partners of NLMK Europe.

“NLMK Group will continue to benefit from synergies between low-cost steelmaking and the production of premium products in close proximity to key consumers on the European market. Slab deliveries from Russia to NBH rolling assets will continue under existing contracts.

“We will continue to review available options for further developing our European rolling assets as part of NLMK Group’s overall strategy, which aims to boost the company’s efficiency.”