Mechel PAO, a leading Russian mining and metals companies, reports receipt of the notice for introduction of a temporary state administration at the integral property complex of the Private Joint-Stock Company ‘Donetsk electrometallurgical plant’, which is part of Mechel Group.
The Decree #12 dated 25 June 2016 and signed by A.V. Zakharchenko, Chairman of the Council of Ministers of the self-proclaimed Donetsk People’s Republic, announces institution of a temporary state administration at the integral property complex of the Private Joint-Stock Company ‘Donetsk Electrometallurgical Plant’ (DEMZ) as well as creation of a state-owned entity ‘Yuzovsky metallurgical plant, on its base with all of DEMZ’s property to be transferred for the newly created enterprise’s use.
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.
Mechel is currently examining the situation from legal perspective and will, if necessary, take all measures to protect the company’s rights and interests through the due process of law.
These events will not materially affect the company’s financial results, since production at DEMZ has been suspended in 2012 and the company created full provision for impairment of DEMZ as a result of 2013 – 2014.
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