Mechel notified of temporary state administration at Donetsk plant
MOSCOW. July 22 (Interfax) - PJSC Mechel has received an order on the introduction of a temporary state administration at the integral property complex Donetsk Electrometallurgical Plant (DEMZ), which belongs to the Russian steel and coal group, Mechel said in a statement.
"The company's preliminary view is that Mechel runs the risk of losing control over any future production and commercial activity of DEMZ for an indefinite period," the statement said.
The order from the chairman of the council of ministers of the self-proclaimed Donetsk People's Republic, Alexander Zakharchenko, which is dated June 25, talks about the creation the state enterprise Yuzovsky Metallurgical Plant on the basis of DEMZ and the transfer of the plant's assets to it, Mechel said.
Mechel said it is conducting a legal review and, if necessary, intends to take all measures to protect its rights and interests under the law.
"These events will not have a substantial impact on the company's financial results, since DEMZ's production activities were halted in 2012 and the company fully provisioned for DEMZ's impairment in 2013-2014," the company said.
The Mechel group holds controlling stakes in steel, coal mining and energy companies, as well as commercial ports. Igor Zyuzin and his family are Mechel's principal beneficiaries with 55.04% of shares, according to the latest information.