Dunaferr share sale likely to help Severstal exist in EU

Dunaferr share sale likely to help Severstal exist in EU

According to market reports, Russian steel producer Severstal that plans an expansion worldwide, decided to participate in the Hungarian steel maker Dunaferr's tender regarding the sale of its 80% share. In the tender which is held by the privatization agency APV; Ukrainian Donbass Industrial Union and LNM Group gave binding offers as well. In case Severstal takes over 80% shares of Dunaferr, this will enable the Russian company to indirectly exist in the EU market as Hungary will become an EU member country in May 2004. Also, Severstal will relatively benefit from this take over because Dunaferr mainly exports to the EU. Severstal stated that there is a high possibility of raising hot rolled production capacity and assuring to meet raw material requirements of the Hungarian steel maker which is already a major customer of Severstal's raw material division, Karelsky Okatysh. Conditions set up by the agency for the bids to be submitted are; a capital injection of at least Hungary Forint (HUF) 13 billion (around $60 million or €49 million) and an investment of €250 million ($305.4 million) over five years for technology upgrades. Besides, Dunaferr's current level of employee should be maintained and an agreement with respect to the financial consolidation of the company should be reached with the creditor banks.