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Krivorozhstal Assessed at $1.16 billion
The Ukrainian government discussed a repeat privatization of Krivorozhstal metallurgic plant yesterday. The State Property Fund suggested that the tender committee set the starting price at $1.16 billion. The final price will depend on the current situation on the world steel market, the outcome of trials over Krivorozhsal and terms of investments in the plant.
Krivorozhstal is Ukraine’s largest steel maker. It produced 7 million tons of steel and brought in $1.9 billion revenues. The plant’s state-owned 93.02 percent stake was bought out last year for $804 million by Investment & Metallurgical Union of Donbass (IMS) set up by Ukrainian businessmen Rinat Akhmetov and Viktor Pinchuk. Overseas bidders, including Russian Severstal Group of Alexey Mordashe and Evrazholding of Alexander Abramov were denied the access to the tender. The Kyiv Economic Court invalidated the transaction on April 22 and ruled to return Krivorozhstal’s stocks to the state property agency. The Ukrainian Government decided to hold a repeat sale of the plant, the bidding is on October 24.
The price at which the Ukrainian government sold Krivorozhstal last June became one of the main reasons for the disaffection with former Ukrainian president Leonid Kuchma’s policy. Severstal revealed last year the price it had been ready to pay for the plant. This is $1.2 billion, which is $400 million more than the sum offered by the buyers from IMS. Yulia Timoshenko is convinced Krivorozhstal was sold so cheaply because Mr. Pinchyuk had lobbied the terms of the tender that enabled him to do away with rivals. The current prime minister will surely seek the plant being sold at a maximum possible price. The question of the plant’s value became a political one for her even before the win of the Orange Revolution.
Yesterday’s session of the tender committee proposed to set the starting price at 5.88 billion hryvnias ($1.16 billion). In spite of earlier statements, the Ukrainian authorities did not engage in an independent assessor, Kommersant learnt from a source in the Ukrainian State Property Fund, However, Deutsche Bank will be drawn for an expert advice and the auction will be private (all the proposals are handed in once and simultaneously), as Ms. Timoshenko suggested. The tender commission can change the starting price, proposed by the state agency, up to August 4, though no drastic changes are expected. Russia’s Severstal and Evrazholding, British Mittal Steel, US Steel and Indian Tata Steel earlier declared their intentions to bid. The price for Krivorozhstal may soar to $2-2.5 million due to the participation of these big players. However, the recession on the world market may bring the plant’s capitalization down to $1.5-1.9 billion.
www.kommersant.com
All the Article in Russian as of Aug. 02, 2005
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