PRESS RELEASES   



 

LNM Holdings and the Authority for Privatisation and Administration of State Ownership (APAPS) sign agreement for the privatisation of SIDEX

BUCHAREST, Romania, July 25, 2001: LNM Holdings N.V., a member of The LNM Group, the world?s fourth largest steel producer, and APAPS, today executed a Share Sale and Purchase Agreement for the privatisation of SIDEX S.A. (“the Company”), the integrated steelworks in Galati. The completion of the transaction will take place following the satisfactory completion of closing conditions by both parties.

Under the agreement reached after four months of intense negotiations following the bid submission, LNM Holdings will acquire the entire stake in SIDEX belonging to the Romanian Government, amounting to approximately 90% of SIDEX's share capital for a cash payment to the Government. In addition, LNM Holdings has assumed certain agreed debt obligations and undertaken to invest US$351 million in the Company?s investment program over the next 10 years, aimed at improvements in productivity, quality and product mix to meet the needs of customers in the global market place and the raising of environmental standards. The Group has also guaranteed US$100 million in working capital, and has agreed not to reduce the steelplant?s workforce over the next 5 years from the closing date, other than by natural reasons and within the total employment cost budget of the Company.

Present at the signing ceremony today were, His Excellency, Adrian Nastase, Prime Minister of Romania, Ovidiu Musetescu, Minister for Privatisation, Richard Ralph, British Ambassador to Romania and Lakshmi N. Mittal, Chairman of The LNM Group.

Prime Minister Adrian Nastase stated today, 'It gives both myself and my colleagues in the Cabinet great pleasure to take part today in a ceremony with a very special meaning. Many have said that our Government does not want privatisation; many have said that we do not want to renew the economic structures and to move forward with the economic reform. Still, at this moment, 200 days from our coming in office we are able to stand before you with facts. We are talking about the privatization of the Agricultural Bank (Banca Agricola), we are talking, among other things about the privatization of the SIDEX, probably the most important privatization of this period, not only for Romania, but more widely

I do not intend to remind what SIDEX means to Romania. Still I would like to state that 150,000 citizens of our country depend on SIDEX. 60% of the population of the Galati city and of its surroundings depend on the success of the endeavour undertaken by us today. On the other hand, it is very clear that so far SIDEX has been generating 80% of the total losses caused by Romanian state-owned enterprises. Due to the impossibility to offer the necessary capital inflow for investments, it is obvious that technologies could no longer be upgraded; thus a certain erosion took place, accompanied by a decrease in quality. This is why we needed a partner, a strategic investor and I am very glad that I can now welcome the closing of the privatisation contract, offering the foundation for further partnership.

The LNM Group is the fourth largest steel producer in the world. I will not go into details of the contract, but I believe that it is very important to emphasize that this does not represent merely the selling of a share portfolio, a simple privatisation; the contract we are signing today is, first and foremost, a partnership contract, with a reliable investor, from whom we expect further responsible participation in the productive economic actions of Romania', Mr. Nastase concluded.

In his statement, Mr. Mittal said, “We have concluded the signing of the definitive agreement on schedule, and we are extremely excited to have the opportunity to participate in this important step in Romania?s economic reform process. We commend Prime Minister Nastase and Minister Musetescu for their commitment toward the privatisation and look forward to their continued support and partnership for the future of SIDEX.”

Mr. Mittal added, “The acquisition of SIDEX is also an important strategic step for The LNM Group. Our over-riding goal is to make SIDEX the operating benchmark for steelmaking in Central and Eastern Europe, thereby ensuring the Company builds a strong position in the highly competitive global steel industry,” he added.

SIDEX has over 27,000 employees and a steelmaking capacity of 5 million tons. Most of the Company?s 3 million tons of steel currently shipped are flat products, approximately half of which is exported.

About The LNM Group

Over the last 10 years, The LNM Group has become the world?s only truly global steel producer, with annual revenues of approximately US$6 billion. The Group has a total of over 70,000 employees. The Group?s shipments were over 21 million tons in 2000.

LNM Holdings N.V. is the holding company of Ispat Karmet, the privately owned steel company in Kazakhstan. The company is registered in the Netherlands Antilles, and is a member of The LNM Group, which is wholly-owned by Lakshmi N. Mittal.

Other members of The LNM Group, also include Ispat Indo with a steel making operation in Indonesia, and Ispat International N.V., (NYSE:IST US; AEX:IST NA) which has main steel making operations in the U.S., Mexico, Trinidad, Canada, Germany and France.

Media Relations Inquiries:
Annanya Sarin
Head of Communications
The LNM Group
Tel: + 44 20 7543 1162
+ 44 7768 296 037
annanya.sarin@ispat.com

Radu Bilbiie
Director of Communications
APAPS
Tel: + 40 1 303 6510
dirrp@autoritate-privatizare.ro

Sorana Zbarcea
MMD Public Relations,
Tel: + 40 1 335 0415
sorana_zbarcea@mmd.ro

 

Privatization Authority and State Participation Administration
July 25, 2001