Mittal Steel Company Acquires a 93% Stake in Kryvorizhstal in Ukraine
October 24 2005 - 10:08AM
PR Newswire (US)
ROTTERDAM, Netherlands, October 24 /PRNewswire-FirstCall/ -- Mittal
Steel Company N.V., ("Mittal Steel") the world's largest and most
global steel company, today announces that it has agreed to acquire
a 93.02% stake in the capital of KryvorizhStal ("the Company") from
the State Property Fund of Ukraine following a public auction.
Under the terms of the share purchase agreement, Mittal Steel will
acquire 3,590,038,755 shares of the share capital of the Company
for a total consideration of UAH 24.2 billion (US$4.79 billion*).
The transaction will be financed out of Mittal Steel's own cash
resources and credit lines. In addition to its existing liquidity
lines and cash balances, Mittal Steel last week signed a US$3
billion loan agreement with Citigroup with terms similar to its
US$3.2 billion revolving credit facility. KryvorizhStal is the
largest carbon steel long products producer in Ukraine and the
nearby region with 2004 liquid steel production of 7.7 million tons
and 2004 shipments of 6.7 million tons. It also produced 17.1
million tons of iron-ore. The Company had sales of US$1,897
million, EBITDA of US$551 million, EBIT of US$505 million and net
income of US$378 million in 2004. The EBITDA margin was 29% in
2004. The net cash position was US$413 million as at 30 June 2005.
This transaction marks another key milestone for Mittal Steel's
business in Eastern Europe, which is an integral part of its
European and global strategy. KryvorizhStal is a low-cost
production platform with a strategic location, at the heart of a
strong growth market. KryvorizhStal operates a single integrated
steel plant located within a large iron ore mining complex (over a
billon tonnes of iron ore reserves) assuring 90% of the company's
requirements at low mining costs. KryvorizhStal is also almost
self-sufficient in coke and is predominantly supplied by nearby
coal mines. 80% of the total sales are exported through major ports
only 400kms away from the plant, benefiting from a good rail
transportation network. Kryvorizhstal has been modernizing its
facilities and has already received ISO 9001 Quality Accreditation.
Finally, KryvorizhStal today has a 10 million tons crude steel
capacity, but only 6 million tons of rolling capacity. This creates
attractive debottlenecking opportunities with additional capacity
that can be easily leveraged within Mittal Steel Company. Thus
KryvorizhStal has a high strategic value for Mittal Steel. As a
result of the transaction, Mittal Steel will be in a position to
provide the Company with technical production support, procurement
assistance, sales and marketing support and management knowledge
sharing. Mittal Steel believes that the synergies and future
opportunities generated by the transaction will enhance long-term
value for our shareholders. The transaction is subject to
regulatory approvals. Closing of the transaction is expected to be
before year-end. UBS Investment Bank is acting as financial advisor
to Mittal Steel on this transaction. Commenting, Lakshmi Mittal,
Chairman and CEO, Mittal Steel, said: "Strategically this is a key
acquisition for Mittal Steel Company, as it provides us with a
large size low-cost production platform in a core and fast growing
market. KryvorizhStal is a high quality steel and mining asset and
we are confident that we can help the company expand further by
providing our marketing, procurement and technological knowledge
and expertise. KryvorizhStal is today a good quality asset. We are
excited about the prospects of accelerating its growth.
"KryvorizhStal could over the years become our largest steel plant
in the region and offers significant flexibility regarding the
development of its product range. KryvorizhStal will add valuable
mining reserves to the group. Overall, we expect to generate over
US$200 million of pre-tax synergies by the end of 2006. "The
transaction is value creating for our investors as KryvorizhStal
enhances the growth profile and the profitability of Mittal Steel.
The transaction is expected to be earnings enhancing from year one
and will generate attractive return on capital. "We are looking
forward to starting the integration of KryvorizhStal within our
company. We have a proven track record in successfully managing
operations in the region and will initiate promptly a best-practice
sharing programme. "We are also looking forward to making an impact
on the community. Our ambition is to become the world's most
admired steel company and we pride ourselves in being socially
responsible. We will provide support to social, sport, educational
activities in addition to improving the environment. "In summary,
we are convinced that Mittal Steel is the best partner for
KryvorizhStal and for Ukraine and we are looking forward to
welcoming it within our group. Investment Community Conference Call
and Webcast Mittal Steel will host a presentation to the investment
community regarding today's announcement on Monday 24th October. A
telephone and webcast presentation will be available live at 11:00
AM New York time / 4:00 PM London time on this day. You may access
the webcast presentation at http://www.mittalsteel.com/. The
conference call can be accessed by dialing +1 866 700 6067 in the
United States or +1 617 213 8834 outside of the United States. The
password is 'Mittal Steel'. A replay of the webcast and the
conference call will be made available. You may access the webcast
replay at http://www.mittalsteel.com/. A replay of the conference
call can be accessed by dialing +1 888 286 8010 in the United
States or +1 617 801 6888 outside of the United States. The
passcode for the replay is 34486773. Forward-Looking Statements
This news release contains forward-looking statements that involve
a number of risks and uncertainties. These statements are based on
current expectations whereas actual results may differ. Among the
factors that could cause actual results to differ are the risk
factors listed in Mittal Steel's most recent SEC filings. About
Mittal Steel Mittal Steel is the world's largest and most global
steel company. The company has operations in fourteen countries, on
four continents. Mittal Steel encompasses all aspects of modern
steelmaking, to produce a comprehensive portfolio of both flat and
long steel products to meet a wide range of customer needs. It
serves all the major steel consuming sectors, including automotive,
appliance, machinery and construction. For 2004, Mittal Steel had
revenues of US$22.2 billion and steel shipments of 42.1 million
tons. The Company trades on the New York Stock Exchange and
Euronext Amsterdam under the ticker symbol "MT". * Assumes on
exchange rate of US$1 = UAH 5.05 DATASOURCE: Mittal Steel Company
NV CONTACT: For more information, please contact: Nicola Davidson,
General Manager, Communications, Tel: +44-(0)7730-671-998, Paul
Weigh, Manager, Communications, Tel: +44-(0)7795-962-796
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