The Serbian investment company Hefestos Capital has acquired the European assets of the Pipe Metallurgical Company (TMK) – two plants in Romania and their marketing divisions in Europe and the USA. This is stated in a press release from TMK Artrom SA, the former subsidiary of TMK, which united Romanian factories. After the transaction, the name of this company was changed to Artrom Steel Tubes.
The buyer, according to the announcement, is “the largest investment company in Southern Europe.” The amount of the deal was not disclosed. TMK declined to comment. Vedomosti sent inquiries to Hefestos Capital and Artrom Steel Tubes.
On December 12, TMK stopped including European subsidiaries in its list of affiliates, but at that time did not explain why this happened.
Artrom Steel Tubes includes a steel plant in Resita with a capacity of 450,000 tons per year and a pipe plant in Slatina with a capacity of 200,000 tons of seamless pipes for mechanical engineering per year. The pipes are sold through the European and US sales divisions of Artrom Italia srl and Artrom USA LLC. The company’s annual turnover is estimated at 2 billion lei (approximately $442 million), according to the release.
TMK acquired 100% of the charter capital of Sinara Handel GmbH, which owned a controlling stake in the steel plant and pipe plant, in March 2006. The deal was not disclosed.
TMK Artrom SA also notes that the new owners of Artrom Steel Tubes have already applied to unfreeze the funds of the former Romanian subsidiary of TMK, which were blocked due to sanctions against the former largest shareholder of the Russian pipe company Dmitry Pumpyansky. On March 9, 2022, the EU announced sanctions against Pumpyansky, who at that time was the owner of 90.6% of TMK. The day after that, the businessman withdrew from the beneficiaries and the board of directors of TMK.
But despite this, at the end of March, the National Agency for Tax Administration (ANAF) of Romania blocked the funds and economic resources of TMK Artrom, TMK Assets srl and TMK Europe GmbH, TASS reported. The payment of salaries was also frozen, which provoked protests from workers. Later, the agency allowed the most significant payments relating to the company’s commercial activities to be made.
“This moment[of the deal. – Vedomosti]is very important for the future of the company, because it gives us a way out of a period of particularly strong difficulties caused by the fact that the former beneficial owner of Artrom is under sanctions,” said the chairman of the board of directors of Artrom Steel Tubes Adrian Popescu (his words are given in the press release).
According to Popescu, the Artrom group can now resume development programs that had to be postponed over the past three years, first due to the coronavirus pandemic, and then because of the NWO in Ukraine and the subsequent sanctions.
Hefestos Capital was founded in 2001 and is owned by Milutin Nikolic and Pavle Kavran, both of whom have over 25 years of investment experience. The company has experience investing in the manufacturing, retail and energy sectors in Europe, Asia and Africa.
Until 2020, EBITDA of assets consolidated on TMK Artrom was about $40-50 million per year, recalls Boris Krasnozhenov, head of the securities market analytics department at Alfa-Bank. The debt of these assets, according to him, amounted to about $175 million. “It is difficult to say now what multiplier a deal could be in these conditions,” the analyst notes.
The exit from the European business will not significantly affect TMK’s performance, since in 2021 the revenue of the European division of TMK amounted to only 20.8 billion rubles, which is less than 5% of the group’s total revenue, the Sberinvestitsii Telegram channel estimates. For comparison: TMK’s revenue in 2021 reached 429 billion rubles, and in the first half of 2022 – 300 billion rubles, analysts of the channel write.
According to Sergey Grishunin, managing director of the NRA rating service, based on the annual revenue of Artrom Steel Tubes and the company’s capacities, the deal can be estimated at $150 million to $250 million.