US Steel buys Serb company

BELGRADE (Reuters) – United States Steel Corp announced yesterday it was acquiring Serbia’s sole steel mill, Sartid, which is in receivership proceedings, for $23 million and pledged to invest $150 million in the plant over three years. The second largest American steelmaker said the deal should be finalized in the third quarter of 2003 and that it was taking over the steel mill and six subsidiary plants without any liabilities. It said the deal will get the final go-ahead once several countries complete anti-monopoly checks, but a group of creditor banks were disappointed that they were sidelined in the negotiations. Sartid, located in Smederevo, some 45 kilometers (30 miles) southeast of Belgrade, was placed in receivership last August with accumulated debts of $1.7 billion. «We are essentially acquiring the entity free of all economic liability,» John Goodish, US Steel’s executive vice president for international activities, told reporters. It will invest $150 million to upgrade the facilities. US Steel has also promised $5 million in community support over five years and $1.5 million for an economic development center. In addition, the company has pledged not to lay off any of Sartid’s 10,500 workers for three years. Goodish said he expected the plant to return to full steam of 2.2 million tons a year from the present 600,000 tons in three years. Banks feel the pinch Goodish said the timing of the deal – shortly after the assassination of Serbian Prime Minister Zoran Djindjic on March 12 – showed it had confidence in Serbia’s prospects. «We get the feeling there is great potential here, that this is an economy on the verge of really becoming great,» he said. But a group of banks that had financed Sartid in the last few years of Slobodan Milosevic’s rule may not welcome the deal amid suggestions they were bypassed in the negotiations. The banks, with claims totaling some $150 million according to the bank syndicate’s leader, may now have to wait years before they can get their hands on the money through the bankruptcy court. A foreign banker, who asked not to be named, told Reuters the syndicate, comprising German, Austrian, French and Swiss banks, was not likely to take the deal as a good promotion for investing in Serbia. But US Ambassador to Serbia and Montenegro William Montgomery described the deal at a separate conference as «incredibly important… and a major step forward and a sign of real confidence in the Serbian economy.» US Steel signed an agreement in November on technical cooperation and administration of Sartid while it was in receivership. It said it has spent about $50 million to maintain and improve production in Smederevo and Sabac.