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Can I spend the Chelyabinsk plant 300 million. USD?

If Chelyabinsk Electric Works decides to carry out the acquisition of Serov Ferroalloy Plant, the purchase could cost him 300 million. Dollars at the expense of the offer price of 2012. Purchase is made to increase the share CHEMK on ferroalloy market in Russia from 70% to 90%. Besides Serovskoe company in the past year has shown much better production results than the plant. In particular, the SMA profit for last year amounted to 11.8 billion RUB, net profit from them -. 645 million RUB… Precise data on the income for the previous year until CHEMK provides, however, focusing on the changes in revenues in the first nine months of 2013 can calculate a preliminary figure, which will be about 27 or 30 billion. RUB. As to the losses that during this period they are estimated at 982 million. RUB. In addition, Serov, the company is not burdened debt, while the Chelyabinsk plant at the end of September last year, admitted for a long-term liabilities in the amount of 11.29 billion. RUB.

The ultimate cost of the agreement is not yet known and will depend on the results of the audit, which is expected to be held after the Antimonopoly Service of Russia approves the deal. However, the preliminary cost of the ID Serov Ferroalloy Plant was identified back in 2012, when the corporation ENRC-voiced offer to purchase 5,270,618 shares of Serov Ferroalloy Company. Focusing on the proposed price, the total valuation of the company is about 300 million USD, although earlier analysts voiced figure 1.5−2 times lower.

In the event that an agreement will be concluded, at the Chelyabinsk plant electro there a number of problems, one of which is the marketing strategy, since CHEMK and STP are suppliers for the same companies in Russia and abroad. Another unpleasant moment — the high cost of electricity for Serov, which, moreover, continues to rise. The lack of low-cost electricity will not give the opportunity to generate stable positive earnings. Thus, among the main factors influencing the decision to sell the Serov Ferroalloy Plant — the need to minimize the debts of the enterprise and the need for adequate investment.

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