Moscow - Evraz’s South African steelmaker plans to apply for the local equivalent of bankruptcy protection as a slump in demand for the metal left it with insufficient funds.
Evraz Highveld Steel and Vanadium’s board filed a resolution to begin so-called business-rescue proceedings with the country’s companies regulator, the unit said in a statement. Highveld appointed business-rescue officials, it said on Tuesday.
Evraz, partly controlled by billionaire Roman Abramovich, bought a quarter of Highveld from Anglo American in 2006. It raised the stake to 85 percent the following year, paying more than a combined $678 million for the transactions.
Moscow-based Evraz sought to sell the business in 2013 but failed to find a buyer as metals prices sank. The unit was hit by “weakened global steel and vanadium markets and a severe reduction of domestic steel demand”, Highveld said on Tuesday. Vanadium and steel fell more than 20 percent in the past year.
Evraz said in August it had found a partner - Macrovest 147 Proprietary Ltd, led by Barend Petersen, executive chairman of De Beers Consolidated Mines - to buy 34 percent of Highveld for R289 million, and help develop the business.
That agreement has lapsed, the unit said in its statement. Evraz confirmed in a separate statement on Tuesday the proposed sale won’t be completed. Its press service in Moscow wasn’t immediately able to comment beyond the statement.
Evraz fell 0.7 percent to 201.7 pence by 9.31am in London. Highveld, suspended in Johannesburg trading, had a market value of R164-million at the close on Monday.
* With assistance from Ana Monteiro in Johannesburg
Bloomberg