United States Steel Corporation announced today that US Steel Balkan, a wholly owned Serbian subsidiary of US Steel, has agreed to purchase out of bankruptcy Serbian steel producer Sartid and six of its subsidiaries for $23 million.
The purchases, which are expected to be complete by the third quarter of 2003, are subject to several conditions including the successful completion of anti-monopoly review by competition authorities in several countries.
Sartid’s production facilities, which are located in northern Serbia, include an integrated mill with a raw steel design capacity of 2.4 million net tons.
Sartid primarily produces sheet products and its tinning facility has an annual capacity of 130,000 net tons. Production from these facilities has been substantially below its design capacity during the past several years due to Sartid’s financial difficulties.
In an associated agreement, which will become effective upon the completion of the acquisition, US Steel Balkan has said it will spend up to $150 million over five years on working capital and the repair, rehabilitation, improvement, modification and upgrade of the facilities.
A portion of this spending is subject to certain conditions related to Sartid’s commercial operations, cash flow and viability. In addition, US Steel Balkan has agreed to refrain from layoffs for a period of three years.
Following a successful model used by US Steel Kosice, U S Steel Balkan will conduct economic development activities over the course of three years and spend no less than $1.5 million on these efforts. The program will focus on publicising to global investors the benefits of establishing manufacturing businesses in Serbia.