TMK plants moved to the Serbian side – Newspaper Kommersant No. 12 (7457) dated 01/24/2023
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Serbian investment company Hefestos Capital has become the owner of TMK’s European assets, the main of which is a plant for the production of seamless pipes in Romania. The cost of the transaction was not disclosed: in 2019, the division was valued at $160 million, but given the discriminatory conditions for Russian business in Romania, the discount could be significant. This is not the first transaction of a Russian company with little-known investment funds: in January, LUKOIL sold a refinery in Sicily to a company with Cypriot participation. According to experts, such transactions are logical, given the sanctions risks for Russian business.
The Serbian investment company Hefestos Capital, unknown in Russia, became the owner of the European assets of the Pipe Metallurgical Company. This was reported by the Romanian edition Profit.ro. “The acquisition of Artrom will open up new perspectives and we look forward to working with the company’s management, the team of specialists, as well as the Romanian authorities, our suppliers and customers around the world to further develop the potential of Artrom Steel Tubes (the new name of TMK-Artrom.— “b”),” the publication quotes the words of the co-owner of the investment company Milutin Nikolic. TMK does not comment.
TMK-Artrom united TMK’s production assets in Romania for the production of seamless pipes with a capacity of 200 thousand tons per year and sales branches in Germany, Italy and the United States.
Effective December 12, 2022, the assets and their management have been excluded from the list of TMK affiliates.
TMK is not under sanctions. Last spring, its founder Dmitry Pumpyansky was included in the EU sanctions list, but left the company’s shareholders and transferred control to management. According to the Romanian media, the sanctions against Mr. Pumpyansky caused the blocking of TMK-Artrom’s accounts in the country, but in the summer the funds were unblocked.
The Romanian government seeks to control Russian companies that are under sanctions. As Radio Romania reported in June 2022, businesses in the country owned by Russian individuals or companies that are under international sanctions will be able to continue operating if they agree to a system of state supervision. State control is carried out through the appointment of a representative of the Ministry of Economy of Romania to the management of the enterprise.
Hefestos Capital, according to information on its website, was founded in 2001. “We provide our clients with individual, independent strategic advice and pay special attention to each of them,” the site says. According to the Serbian Companies Registry, Milutin Nikolic and Pavel Kavran each own 50% of Hefestos Capital.
For TMK, the sale of European plants will not have a significant impact on business. The main sales market for the company is Russia.
As for TMK-Artrom, the EBITDA of the European division in 2018 and 2019 was 1.4 billion rubles each. In 2020, due to the pandemic, it was reduced to 500 million rubles. The sales volume of the division’s pipes in 2020 was 174 thousand tons, which is lower than the pre-pandemic years – 201 thousand tons in 2018, 187 thousand tons in 2019. In 2020, the plants worked with a load of 80%.
Against the backdrop of sanctions, many Russian companies were forced to sell their assets in Europe, often the buyers are little-known investment groups on the market. So, in January LUKOIL sold its refinery in Sicily of GOI Energy, which is owned by the Cypriot investment fund Argus New Energy Fund.
Based on the parameters of the offer that TMK Europe put forward to TMK-Artrom shareholders at the end of 2019, the company’s value could be $160 million. Net debt at the end of the first quarter of 2019 was €145 million. Kirill Chuiko from BCS says that given the new realities, having assets abroad has become quite risky, while cross-border restrictions call into question operational synergies with the main Russian business.
According to Sergei Grishunin from the NRA, the Romanian plant provided up to 70% of TMK’s pipe sales in Europe. The analyst believes that if the supply of Russian semi-finished products to the plant is maintained until the end of 2024, the asset will remain one of the most profitable in the EU, where most of the ferrous metallurgy today does not work or works at part load. This will allow the Romanian plant, among other things, to enter the market of Western Europe, where, due to high energy prices, there is a shortage of rolled steel and pipes.
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