11.10.2005
This year, VÍTKOVICE STEEL was going through a very difficult process, which entered its ultimate stage on July 13, 2005. On this day the Czech Government approved the results of the tender for sale of the last Czech Government-owned steel company whose 99 percent shareholding in the basic capital was owned by OSINEK since 2002.
The tender winner is a Russian group Evraz Holding, which offered 7.05 billion crowns for the company. Another 2.5 billion crowns the firm promised to invest to the development of the company and 800 million to the development of the region. Evraz Holding, is the largest steel producer in Russia and the twelfth largest steel producer in the world who controls three largest steel plants in Russia, i.e., NTMK in Niznij Tagil, Zapsib and NKMK in Siberia. Evraz also owns and operates the Far East port of Nachodka, which is one of the most important Russian export terminals.
„Only few realize today that VÍTKOVICE STEEL was privatized in a very short time for the third time already, and hence it is good that the privatization process comes to the end and that this last Czech Government-owned steel company has got a strong owner who is able to make further investments to the development of the company“ said Vladimír Bail, Chairman of the Board of Directors and CEO of VÍTKOVICE STEEL. „I believe that the new owner will deliver the acts with which he has agreed in his business plan and I am convinced that VÍTKOVICE STEEL does not need to be afraid of its future.“
VÍTKOVICE STEEL, which presently employs 1600 people, is a very healthy and prosperous firm. This was clear to the potential investors who could see the results of the company for the first half of 2005 in the datarooms. The pre-tax profit for the first six months compared with the same period last year increased more than five times from 335 026 thousand CZK in the first half of 2004 to 1 818 298 thousand CZK this year. The sales from own products for the first six months compared with the first half last year increased by more than 45% from 5 512 799 thousand CZK to 8 020 880 thousand CZK.
OSINEK bought the shareholding in VÍTKOVICE STEEL, a. s., in May 2002 for 3.31 billion crowns. OSINEK announced a tender for sale of this shareholding on January 13 this year. Potential investors received an information memorandum in February. The final and the most strenuous stage of the privatization process – due diligence – started in April. In May the investors presented their final price offers that were subsequently evaluated by the Board of Directors of OSINEK and by the Government privatization committee. The Czech Government then confirmed the winner of the tender on July 13. On August 5, OSINEK and MASTERCROFT signed the contracts on sale of VÍTKOVICE STEEL to a Russian group EVRAZ. One week later the Czech Antimonopoly Office unconditionally approved the acquisition of VÍTKOVICE STEEL by MASTERCROFT Limited, which is a subsidiary of the Russian Evraz Group S. A. The Office found out in the administration proceeding that the new entity would continue facing competition on the market. Further, this acquisition will not create or enhance dominant position of the merging companies.
Price offered for VÍTKOVICE STEEL (in billions of Czech crowns)
Mastercroft (Evraz Group) 7.05
System Capital Management 7.02
Třinecké železárny 6.00
(subsequently increased the offer to 7.05 billion)
The following parties were ruled out from the tender:
Penta Investment 9.03
Charles Capital 5.2
HIGHLIGHTS on Evraz Holding
* created on 1992
* founded by Alexandr Abramov
* the largest steel producer in Russia and the twelfth largest steel producer in the world
* steel production: 13.7 million tons
* sales (2004): 5.9 billion USD
* profit: 2 billion USD
* manpower approx. 100 thousand
* market capitalization 5.1 billion USD
(Source: ČTK)
HIGHLIGHTS on VÍTKOVICE STEEL
* the third largest Czech steel company
* steel production: 960 thousand tons of steel per year
* sales (2004): 13.5 billion CZK
* profit: 1.466 billion CZK
** manpower: 1 600
