Commercial Metals bids to acquire second Croatian mill
Commercial Metals Company (CMC) announced that its subsidiary, Commercial Metals International (CMI), has submitted a bid to acquire “Zeljezara Split” d.d. Kastel Sucurac (Split) from the Croatian Privatization Fund.
Split is an electric arc furnace steel reinforcing bar mill with a wire mesh facility. This is the second Croatian operating steel mill for which CMI has submitted a purchase offer. In February, CMC announced that CMI had submitted a bid for the Valjaonica Cijevi Sisak (Sisak) pipe mill. All bids for the Sisak mill were subsequently rejected by the Fund which has requested new bids for Sisak due by April 17, 2007. These privatization efforts are in preparation for Croatia’s anticipated membership in the European Union in 2009.
CMI is apparently one of six bidders who submitted bids in connection with the proposed privatization of Split. Split has approximately 170,000 metric tons of rebar capacity along with 30,000 tons of mesh capacity. Sisak has currently approximately 70,000 metric tons melting capacity and about 300,000 metric tons of tubular manufacturing capacity in its existing product line which include seamless, welded and cold processed pipe.
CMI’s bid for Split, which includes the share purchase price, assumption of a portion of the debt due to or guaranteed by the Croatian government as well as the assumption of trade payables, is approximately 155.7 million Croatian kuna (approximately U.S. $28 million). This amount does not include additional working capital requirements for increasing the production levels. The bid is subject to execution of a definitive purchase contract.
CMI contemplates future expansions including capital expenditures and working capital increase of at least 300 million Croatian kuna (approximately U.S. $54 million). The existing level of the employee work force will be retained for a minimum of three years under the terms of an agreement CMI has already reached with the trade union representing employees at the facility.