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Magnitogorsk May Lose Pakistan Steel
Magnitogorsk Iron and Steel Works’s purchase of Pakistan Steel Mills, its first overseas asset, may fall through. The plant’s trade union joined a lawsuit filed by the Vatan nationalist party to contend the sale of 75 percent in Pakistan Steel Mills to the Russian company and its foreign partners.
Magnitogorsk Iron and Steel Works was to become the owner of 40 percent stake in Pakistan Steel Mills late May. The consortium of Magnitogorsk Works, Saudi AL Tuwairgi Group and Pakistani Arif Habib Securities won auction for Steel Mills’ stocks for $362 million in April. Yet, the deal may be invalidated or put off for an uncertain period of time.
The Supreme Court of Pakistan suspended Wednesday the sale of the stocks in Pakistan Steel Mills till May 30, the day when the lawsuit of the Vatan party against the Pakistani government, the country’s privatization committee and buyers of Steel Mills is to be considered. Vatan seeks the invalidation of the privatization of the plant claiming that the stake was sold far below its market price. The party says that the plant’s trade union, Employees Management Group, was ready to pay 25 billion rupees, or $390 million, for the stocks.
However, the Pakistani press reported that Employees Management Group left the auction, afraid that the price would be too high. Still, the trade union pushes for the cancellation of the auction’s results and a new sale. The court permitted Employees Management Group to join Vatan’s suit yesterday.
Russian analysts believe that Pakistan Steel Mills was undervalued, compared to prices at auctions for Turkey’s Erdemir or Ukrainian Krivorozhstal.
www.kommersant.com
All the Article in Russian as of May 26, 2006
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