SCM Group Statement

Wednesday, March 15, 2017



SCM Group claims full loss of control over all the Group's assets located in the temporarily ungoverned areas of Donetsk and Luhansk Oblasts

SCM Group states that from today, 15 March 2017, it has no control over the operation of its assets located in the temporarily ungoverned areas of Donetsk and Luhansk Oblasts (NGCT), namely:

In the mining and iron & steel sector (Metinvest): Yenakiyevo Steel Plant PJSC (including its Makeyevka branch –
Makeyevka Steel Plant PJSC), PJSC Yenakiyevo Koksokhimprom PJSC, Khartsyzsk Pipe Plant PJSC, Komsomolske flux and mining company PJSC, Krasnodonugol Coal Company PJSC, Donetskkoks PJSC, Metalen Ukrainian-Swiss joint enterprise LLC.

In the energy sector (DTEK): DTEK Komsomolets Donbassa Mine PJSC, Mospino CPE LLC, DTEK Energougol ENE PJSC, DTEK Vostokenergo LLC (Zuyivska TPP), DTEK Donetskoblenergo PJSC, Tehrempostavka LLC, DTEK Sverdlovanthracite LLC, DTEK Rovenkyanthracite LLC, Electronaladka LLC, DTEK Power Grid LLC, and DTEK Service LLC.

In the real estate sector (ESTA): Pushkinsky BC, 7th Line BC.

In the industrial & raw material sector (UMG): Dokuchaievsk Flux and Dolomite Plant.

For three years our enterprises in the NGCAs, despite all the difficulties, worked exceptionally under Ukrainian legislation, remaining a link between the controlled and uncontrolled territory of Ukraine.

The SCM Group has repeatedly stated that it considers the demand for re-registration of its enterprises and for the payment of taxes to the self-proclaimed DNR and LNR as absolutely unacceptable. Today, we have lost the possibility to ensure the operation of our assets in the NGCAs in line with Ukrainian legislation. We are forced to take the decision to terminate our operations in certain areas of the Donetsk and Luhansk Oblasts that are temporarily uncontrolled by the Ukrainian authorities.

We are filing applications to the law enforcement agencies of Ukraine about the seizure of property of manufacturing enterprises and non-business assets. SCM Group has already addressed the SFS, tax authorities and state funds with a notification of the loss of control over our assets.

We will do everything possible to restore the rule of law and the resumption of work of our enterprises in the NGCAs within the legal framework, including appeals to Ukrainian and international courts.

Earlier, at different times, beginning in 2014, we reported the loss of control over such assets as:

Mechanical Engineering (Corum Group): Corum Donetskgormash, Corum Donetsk Power Plant, Corum Gorlovka Machine Building Plant.

Real Estate (ESTA): Donbas Palace hotel, Park Inn hotel.

Telecommunications: Ukrtelecom and Vega providers.

Agriculture (HarvEast Group): one third of the land bank and more than a third of assets (the holding's operations in the region were discontinued in 2015 without further renewal).

Football infrastructure: Donbas Arena stadium and Kirsha training base.

Also, the Aid+Help Rinat Akhmetov Humanitarian Centre was forced to stop its operation in the NGCAs.

Besides, the FUIB bank, the Parallel petrol station network and the Brusnichka supermarket chain ceased the operations in the NGCAs (in 2014 and 2015, respectively), with Media Group Ukraine offices also closed in 2014.