Initial bids for privatisation of Polish PHS submitted

Initial bids for privatisation of Polish PHS submitted

According to reports, Russian mill Severstal will not be bidding for the privatisation of Polish mills Polski Huty Stali (PHS), claiming that the company currently has no interest in the offered PHS assets. Still, the Polish Ministry of Treasury has set February 24, 2003 as a deadline for Severstal for a possible bid for PHS. It appears that Severstal is not willing to bid for an acquisition due to its belief that the tender terms requiring coverage of social welfare obligations, accumulated debts and future investment needs go beyond the price that Severstal would offer. On the other hand, the sale of PHS is receiving interest from other strong steel making companies namely, US Steel, LNM Holdings and Arcelor. These three companies confirmed having placed initial bids for the Polish steel maker. The deadline to place initial bids under the privatisation tender expired last week on Monday. As per the confidentiality agreement with the Polish mills, no details of the submitted bids were revealed. Germany's Thyssen Krupp has given up o make a bid although it showed some interest at the beginning. The difficulty is to meet the requirements of restructuring the mill, in order to bring up the low quality product range and convincing strong unions for necessary layoffs. The investor would have to take over the Zloty 1.6billion (approx. $415 million) debt owed to the state owned energy suppliers and railways. A further $150 million will be required to invest in the technological upgrades. Financially troubled steelmaker PHS accounts for 70% of the total steel production in Poland.