MMK might buy Lysva Metallurgical Plant, doing due diligence - paper
MOSCOW. Sept 29 (Interfax) - Magnitogorsk Iron & Steel Works (MMK) might acquire the Lysva Metallurgical Plant (LMZ), a producer of automotive steel.
The Federal Antimonopoly Service (FAS) received an application from MMK on August 17 for approval of the deal, national daily Kommersant reported on Friday.
MMK is considering buying LMZ through LLC Lysva Metallurgical Company (LMC). The companies have signed preliminary documents, and MMK is now doing due diligence, the paper said, citing sources.
LMZ's short-term loans and credit totalled 3.4 billion rubles at the end of June, and long-term debt stood at 2.47 billion rubles. The plant posted a net loss of 275 million rubles in the first half of 2017 on revenue of 2.79 billion rubles. It closed 2016 with a net loss of 233 million rubles on revenue of 7.35 billion rubles.
LMZ might be acquired through the transfer of claims to the plant's debts, which total 5 billion rubles.
LMZ, which has capacity to produce 360,000 tonnes of rolled steel products annually, is Russia's only producer of electrolytic galvanized steel and steel products with multilayer decorative coating, the plant's website states. The main customers for the plant's products are the automotive industry, construction industry and engineering sector.
LMZ planned to build a sheet rolling facility with capacity for 820,000 tonnes of steel per year, including a cold rolling mill with hot-dip galvanizing and polymer coating units for 13 billion rubles. The first phase, a line producing steel with decorative polymer coating with capacity of 110,000 tonnes per year, was launched in 2016 at a cost of about 5 billion rubles.