January 12, 2015 Esmark Europe BV Declared as Strategic Partner for Železara Smederevo Steel Works by Republic of Serbia
Company to Proceed With Finalizing Process for Sale and Purchase of Steel Mill; Expects to Close Transaction by February 1st and Begin Revitalization Program
January 12, 2015
PITTSBURGH, January 12, 2015 – Esmark Europe BV, the European investment vehicle of Esmark, Inc. Chairman and Chief Executive Officer James P. Bouchard, today announced that it has been officially notified by the Republic of Serbia that it has been selected as the winning bidder in the privatization process for Železara Smederevo Steel Works.
Esmark Europe, B.V. will now begin the process of finalizing the strategic partnership agreement with the Republic of Serbia to take a controlling 80.1% stake in Železara Smederevo. Esmark Europe expects to close the transaction by February 1st and immediately begin to implement its revitalization program.
The Železara Smederevo Steel Works facilities include two blast furnaces located in the village of Radinac, near Smederevo; a tin plate production facility in Sabac; and a raw materials production and processing facility in Dimitrovgrad.
In making the announcement Esmark Europe, BV’s Chairman and CEO, James P. Bouchard, said, “We are absolutely thrilled that the government of Serbia has selected us as their strategic partner. The Republic of Serbia conducted a fair and transparent privatization process, and we received remarkable support throughout the pre-tender and diligence process. We share in the vision of Prime Minister Alexsander Vucic to return Železara Smederevo to its former glory as an economic engine for the Serbian economy. We look forward to finalizing this process and implementing our restructuring plan, and would like to thank the Selection Commission Head Bojan Bojkovic, Finance Minister Dusan Vujovic, the Železara Smederevo steel workers and their union and other ministries, as well as U.S. Ambassador Michael Kirby for their support during the last ten months. We also extend our sincere thanks and gratitude to the Prime Minister and his entire government team.”
“Following the closing of the transaction our world-class management team will immediately turn its attention to executing our plan to revitalize Železara Smederevo and do everything we can to help stimulate the Serbian economy,” added Bouchard.
Bouchard emphasized that the company believes its strong balance sheet with more than $350 million in equity and no short- or long-term debt, previous management experience in Europe, and operational expertise will be invaluable in repositioning Železara Smederevo Steel Works as an efficient, low-cost producer of steel and tin-coated products across Central Europe. “With our collective management experience in revitalizing the Kosice, Slovakia steel mill, Železara Smederevo’s strategic location and access to low-priced raw materials, and the synergies afforded by its double-reduced cold mill and tin facilities and Esmark’s U.S. tin plate operations, we believe we have the right formula for success,” he explained.
As part of its commitment to the revitalization plan, Bouchard reaffirmed his previous statements that Esmark Europe would invest approximately $400 million USD over the next five years for working capital, capital improvements and other investments; and an immediate infusion of $28 million this year to repair and modernize the steel mill’s second blast furnace, steel shop and sinter plant. Esmark Europe expects the blast furnace upgrades will complement the mill’s new state-of-the-art, $80 million pulverized coal injection plant. The company also pledged to maintain Železara Smederevo Steel Works’ workforce of approximately 5,000 employees as a result of its restructuring and production plan.
Bouchard and key management team members will travel to Belgrade this week to begin finalizing documents with government officials for the sale and purchase of the steel mill assets.
About Esmark Europe BV, Esmark, Inc. and Esmark Steel Group
Headquartered in the Netherlands, Esmark Europe, BV is a newly formed company and the European investment vehicle of Esmark Inc. Chairman and CEO, James P. Bouchard.
Esmark, Inc. is a diversified, privately-held family company with a portfolio of industrial companies with strong roots in the steel industry. Over the years, Esmark has diversified its interests and operations into a number of businesses engaged in the industrial and commodity sectors.
Esmark (a former publicly traded company on NASDAQ: ESMK) has focused on several key industries including steel services, oil and gas exploration, aviation, real estate, professional services, technology and sports management. Esmark Steel Group, a wholly owned subsidiary of Esmark, Inc., is one of the nation’s largest value-added processors and distributors of flat-rolled steel products and provides just-in-time logistics and transportation services to a wide range of customers and industries across the country. For more information visit www.esmark.com or www.steel.esmark.com.
About Železara Smederevo Steel Works d.o.o.
Železara Smederevo Steel Works d.o.o. is a producer of steel, hot and cold-rolled products and tin plate products in Southeast Europe, and its facilities are located in the village Radinac near Smederevo, Sabac and in Dimitrovgrad. Smederevo ironworks production starts in Dimitrovgrad plant and much of its operations are designed for raw material consumption at the Smederevo Steelworks. The steel plant in Smederevo produces iron at one of its two blast furnaces. Steel processing includes a hot strip and cold reduction mill, annealing and tempering units.
The Tin Mill facility in Sabac produces tin-coated steel products used by customers in the packaging industry for production of cans for food products, paints, chemicals and pharmaceuticals. Železara Steel Works uses the Port of Smederevo to unload raw materials delivered by the Danube River, as well as for loading the barges intended for river transportation of products to customers. For more information visit www.zelsd.rs/.
Bill Keegan, Director of Communications