May 26 2004
LNM Group (“LNM”), the world’s second largest and most global steel producer, announced today that they have formed a Consortium with United States Steel Corporation (“US Steel”), the world’s 6th largest steel producer, to take part in the tender for the privatisation of Kryviy Rih Mining and Smelting Plant “Kryvorizhstal” (“Kryvorizhstal”). Ispat Karmet, a member of LNM Holdings operating in Kazakhstan, and Ispat Polska Stal, another member of LNM Holdings operating in Poland, will also be a member of the consortium.
Kryvorizhstal is the Ukraine’s leading steel company, producing in excess of six million tonnes annually. According to the tender issued by the State Property Fund of Ukraine (“SPF”), 93.02% of shares in the Open Joint Stock Company will be sold in the privatisation.
LNM and US Steel are two of the world’s leading steel producers who together can offer a wealth of experience and knowledge to Kryvorizhstal. Together they have combined worldwide steel production of approximately 60 million tonnes and annual coke production of approximately 20 million tonnes.
US Steel also enjoys a prominent position in Central and Eastern Europe, having successfully acquired US Steel Kosice in Slovakia and USS Sartid in Serbia.
LNM has particular experience in privatisations, having successfully completed thirteen successful privatisations around the world. LNM has a leading position in Central and Eastern Europe with 14 million tonnes of production, following the acquisition of Ispat Sidex in Romania, Ispat Nova Hut in the Czech Republic and Ispat Polska Stal in Poland. It has also recently acquired the finishing facilities of Balkan Steel in Macedonia and has submitted a bid for BH Steel in Bosnia.
The strong combined global presence of LNM and US Steel would provide long term benefits to the Ukrainian steel industry and the Country’s economy as a whole. Becoming a part of the global network will further enhance the position of Kryvorizhstal as a domestic producer and will open new opportunities for sales, marketing and technology improvements. Successful privatisation to a leading international consortium would set a precedent for further privatisations contemplated by the Ukrainian Government.
Commenting, Lakshmi N. Mittal, Chairman, LNM Group, said:
“Together, LNM and US Steel can offer a very strong partnership for Kryvorizhstal and we hope this strength will be recognised by the State Property Fund in Ukraine. There has been much comment over the criteria for the current tender process. This is an international tender and as such we expect the SPF to ensure that international businesses be given the opportunity to participate in a fair and open tender.”
“We believe that LNM has the proven experience, financial strength and international standing required to give Kryvorizhstal a solid and profitable future in the world steel markets. This position is further enhanced by US Steel, one of the world’s leading steel companies.”
Commenting, U. S. Steel Chairman, Thomas J. Usher said:
“We are pleased to team with LMN in the bidding for Kryvorizhstal. Together our companies bring an unmatched level of expertise and excellence that will enhance Kryvorizhstal. Both companies have demonstrated that they can successfully acquire and operate former state owned facilites and make valuable contributions to the communities and nations in which they operate.”
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