Esmark Inc. sole valid bidder for Zelezara privatization

Esmark Inc. sole valid bidder for Zelezara privatization

chair of the Commission for the implementation of the Strategic Partnership model for the privatization of the Serbian steelworks, said Friday.

Esmark should acquire an 80.01 stake in the steelworks and Bojkovic expects the relevant contract to be signed no later than January 31.

He also expects negotiations with Esmark to be completed between January 15 and 17, so that the contract could be signed on January 30, or on the last day of the month at the latest.

Bojkovic, who is also Zelezara’s executive director, said that there were two more letters with bids and their senders were unknown.

Esmark complied with all the terms of the tender, and the Commission will review this offer in detail during the day, said Bojkovic.

On December 5, 2014, the Privatization Agency of the Republic of Serbia issued an invitation to tender for a strategic partner with a capital input in the steel plant, where the government is to preserve a 19.99 percent stake in Zelezara’s ownership structure.

Letters of interest for the privatization of Zelezara Smederevo had been sent by ten companies, and six of them filed requests for the purchase of privatization documents. Esmark’s offer has been assessed as the best one.

Esmark’s founder, chairman and CEO James Bouchard told Tanjug recently that the company would invest USD 400 million in the Serbian steel plant over the following few years if it won the tender, adding that nobody would lose their job at the plant.

He stressed that Esmark would invest USD 28 million in Zelezara Smederevo in 2015 alone, and would restart the second blast furnace and make new investments in the central plant.

Serbian Prime Minister Aleksandar Vucic stated in late December that he had organized a total of 31 meetings in connection with Zelezara Smederevo privatization and noted that a successful sale would boost the country's economic growth considerably.

Zelezara’s production accounts for a 0.6 percent GDP increase, and its indirect contribution to it totals over 1.2 percent, Vucic noted.

The re-sale of Zelezara is expected to save 5,000 jobs and probably open 17,000 new ones.

Zelezara Smederevo’s financial capital totals RSD 16.74 billion, while its non-financial capital amounts to around RSD 2.7 billion.

All investors posting minimum annual revenues of at least USD 300 million over the past three years were eligible to tender.

The buyer will have the obligation to resume production at Zelezara's second blast furnace and bring it to at least 50 percent of capacity by the end of 2016 and to preserve full production capacity at its first blast furnace.

The government decided that state creditors should write off Zelezara’s debts with the total sum as recorded on December 31, 2013, on condition that the privatization process by the method of capital input is successfully finalized.

Zelezara Smederevo was sold to U.S. Steel under the name Sartid for USD 23 million in March 2003, and the Serbian government purchased it back for USD 1 in January 2012.

The first tender for the sale of the steel plant was opened in April 2012. The current production at Zelezara is somewhere between EUR 300 and 320 million, while full capacity production could reach as much as EUR 1.4 billion.

The government has been providing around USD 10 million every month to sustain the plant’s production. Zelezara Smederevo owes up to EUR 260 million to banks, up to EUR 120 million to suppliers and its debt for raw materials totals EUR 145 million.