Esmark Inc. can finally celebrate the acquisition of Zelezara Smederevo Steel Works. Chairman and CEO James Bouchard announced Monday that Esmark Europe had been officially notified by the Republic of Serbia as the winning bidder for the steel works.
The recently formed entity Esmark Europe BV will have a controlling 80.1 percent stake in the steelworks with the Serbian government retaining the remaining 19.1 percent. Bouchard and key management team members will meet with government officials in Belgrade this week to begin finalizing documents for the sale and purchase of the steel mill assets. Esmark expects to close on the transaction by February 1 and immediately begin revitalizing the mill.
“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,” said Bouchard in a statement. “We share in the vision of Prime Minister Alexsander Vucic to return Zelezara Smederevo to its former glory as an economic engine for the Serbian economy.
Bouchard emphasized that Esmark’s strong financial position, operational expertise and previous management experience in Europe will be invaluable in returning Zelezara Smederevo to an efficient and low cost producer of steel and tin-coated products. The management team assembled for Esmark Europe previously worked together to revitalize U.S. Steel’s Kosice, Slovakia steel mill. The team will be headed by Mark Whalen as Chief Executive Officer.
Esmark Europe plans to invest approximately $400 million over the next four years for working capital and facility improvements at Zelezara Smederevo. Of that amount, $28 million will be invested immediately to repair and modernize the second blast furnace, steel shop and sinter plant. The 5,000 employees will be retained as part of the restructuring and production plan.
Zelezara Smederevo includes 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. Zelezara Smederevo has more than two million metric tons of annual hot-strip mill capacity.
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