OREANDA-NEWS.  NLMK Group (LSE: NLMK), the largest steelmaker in Russia, and the Walloon Region-owned SOGEPA (Societe Wallonne de Gestion et de Participations S.A.) have signed an agreement providing for the increase of SOGEPA’s stake in NLMK Belgium Holdings (NBH) and joint management of NBH’s businesses.

NBH comprises the production companies and service centres of the NLMK Europe Strip Division (NLMK La Louvi?re, NLMK Strasbourg, NLMK Coating, NLMK Jemappes Steel Center, NLMK Manage Steel Center and NLMK Profil Batiment), and two NLMK Europe Plate production companies (NLMK Verona and NLMK Clabecq).

Under the agreement, SOGEPA’s interest in NBH will increase from 20.5% to 49%. NLMK Group’s and SOGEPA’s existing respective put and call options over the SOGEPA shares will be terminated, and the NBH board of directors will be increased to include four representatives of NLMK Group and three representatives of SOGEPA. SOGEPA will also receive board seats at the principal production subsidiaries of NBH.

NLMK Group and SOGEPA have agreed to support NBH in obtaining financing of its working capital. The shareholders will also make pro-rata contributions to the share capital of NBH.

NLMK Group and SOGEPA have also agreed on a new stage of operational improvement programmes, targeting a return to profitability for the main NBH production companies, as well as the optimization of the structure of the entity’s auxiliary strip production companies.

Oleg Bagrin, NLMK Group CEO, said:

“NLMK Group is confidently and successfully implementing its strategy, which is based on improving operational efficiency. NLMK Group’s operational efficiency programme, covering both our Russian and international production assets, has already generated operational improvements and positive results in 2014. We view SOGEPA as a trusted and constructive state-level partner that supports the necessary restructuring of NBH’s European assets in order to improve their efficiency and create a solid platform for long-term growth.”

Renaud Witmeur, President of SOGEPA, said:

“This agreement underscores the commitment of SOGEPA to its successful partnership with NLMK Group in Europe and confirms the shared belief of shareholders in the business prospects of NBH. SOGEPA is confident that the operational improvement programs launched at the NBH production companies is the right strategy to ensure their efficiency and sustainability in the long-term, as well as economic stability and development in the Walloon Region”.