IRVING, Texas, Feb. 20 /PRNewswire-FirstCall/ -- Commercial Metals Company (NYSE:CMC), headquartered in Irving, Texas, announced that its Swiss subsidiary, Commercial Metals International AG, has submitted a bid to acquire Valjaonica Cijevi Sisak (Sisak) from the Croatian Privatization Fund. CMC is apparently one of two bidders who submitted qualified bids in connection with the proposed privatization of the electric furnace steel pipe mill. Sisak has currently approximately 70,000 metric tons melting capacity and about 300,000 metric tons of tubular manufacturing capacity in its existing product line which include seamless, welded and cold processed pipe.
CMC's bid includes the assumption of debt due to or guaranteed by the Croatian government in the aggregate amount of approximately 180,000,000 Croatian kuna (approximately U.S. $32.2 million) as well as the assumption of existing trade payables and a minimum purchase price for all Sisak shares of 37,000,000 kuna (approximately U.S. $6.6 million) with potential additional payments of 44,000,000 kuna (approximately U.S. $7.9 million). The bid is subject to execution of a definitive purchase contract.
In addition to continuing the existing operations at the mill, CMC contemplates future expansions including capital expenditures and working capital increase of at least 347,000,000 kuna (approximately U.S. $62.1 million). The existing level of the employee work force, less normal retirements or other natural attrition, will be retained for a minimum of two years.
Hanns Zoellner, President of CMC's Marketing and Distribution segment, stated, "We are very excited about the prospects for Sisak and look forward to promptly commencing discussions with the Fund to conclude a purchase contract. With the experience and success we have enjoyed following the acquisition of a majority interest in CMC Zawiercie, our Polish mill, we are confident we can achieve the same results in Croatia. CMC's marketing group annually markets close to 500,000 metric tons of tubular products globally and has previously sold pipe products produced by Sisak. We know their Commercial Metals Bids to Acquire Croatian Mill reputation in the market as a dependable supplier of quality product and believe CMC offers a unique combination of electric arc furnace operating expertise and significantly enhanced marketing capability for the mill. Our strategy is to expand production capability in the key markets of Central and Eastern Europe. This acquisition would definitely fit with CMC's strategic objectives."
This news release contains forward-looking statements regarding the possible transaction discussed. There is inherent risk and uncertainty in any forward-looking statements. CMC can provide no assurance with respect to the timing, value or final determination by the Fund or CMC to proceed with any transaction. The transaction is subject to the satisfactory completion of additional due diligence review, negotiation of a definitive sales and purchase contract and, to the extent applicable, regulatory approvals. CMC will have no further comment concerning the contemplated transaction until a definitive agreement is signed or any further negotiations with the Fund have terminated.
Commercial Metals Company and subsidiaries manufacture, recycle and market steel and metal products, related materials and services through a network including steel minimills, steel fabrication and processing plants, construction-related product warehouses, a copper tube mill, metal recycling facilities and marketing and distribution offices in the United States and in strategic overseas markets.
Source: Commercial Metals Company