Government to launch public competition for Vitkovice

Government to launch public competition for Vitkovice

The Czech government is preparing to get into new endavours to sell this year, the troubled mill Vitkovice Steel, which is currently owned by the National Property Fund, Osinek. Vitkovice has an annual capacity of 1.35 million tons production, covering a wide range of products of carbon, stainless and other alloy steel. The Dutch Group LNM has previously placed an offer for the mill that constituted CzK 3 billion (approx. $98.5 millions) for the company's shares to Osinek, a subsidiary of the country's National Property Fund, a CzK 2.3 billion (approx. $75.5 million) against company's existing debts and debt guarantees and a CzK 1 billion (approx. $32.8 million) to be invested in Vitkovice Steel in the following seven years. However, the Government and LNM have not been able to reach an agreement on the price for a takeover. Although the LNM chairman Mittal was previously quoted in the press stating that he had no intention to revise the bid, reports reveal that the Czech Government does not exclude the company to take part in the new pblic competition. LNM, seeking opportunities to further strengthen in the Eastern Europe, looks to acquire the Polish steel assets, PHS as well. The company is currently competing with other major steel makers such as US Steel and Arcelor in this respect. Steel industry in the Czech Republic, similar to Poland, has been in a bottleneck since the collapse of its main markets from the former communist bloc and therefore had to go under heavy debts resulting in serious reduction and job cuts.