Just a few days before the signing of the sale-purchase contract for Sidex between the Romanian authorities and the Indian-British LNM-Ispat Group, another possible client, France-based Usinor Group, is troubling privatisation waters.
The two groups are engaged in a clash over the top two positions among steel producers worldwide. Taking over Sidex would allow Ispat to become the world's number two, breathing down Usinor's neck.
The French yesterday announced they would present "Usinor's new proposals for Sidex, in order to guarantee this potentially attractive company's long-term future."
Unexpectedly, Usinor called a news conference for tomorrow to go public with its proposals. They claim "new elements" have developed in terms of Sidex's privatisation.
According to sources on the market, the new elements considered are extinguishing Sidex's large debts to the state, which decision would allegedly be part of the contract with Ispat.
Should this happen, the plant would become a much better deal than several months ago, when the French announced they would buy it only if allowed to run it for two years first. Sidex has some $900 million in debts.
Usinor has put a lot of political pressure lately to have Sidex's privatisation delayed, which would allow it to successfully compete with Ispat.
At present, Ispat is the only company negotiating with the Romanian authorities and complies with every formal requirement to sign the contract (the purchase of the job specifications book and depositing the banking guarantee worth $47 million).
As far as the law is concerned, Usinor may no longer participate in the bid for Sidex. To make it happen, the Government should have to delay the privatisation.
Certain sources say the French group presented the Romanian Government a letter stating its intention to buy 25% in Sidex and get the usufruct of another 26%, which practically means getting control over Sidex. The French will not come up with a complete offer sooner than two years.
On the other hand, Usinor representatives had talks with the Romanian delegation led by President Ion Iliescu, during the Crans Montana forum.
Furthermore, the French PM Lionel Jospin, accompanied by Usinor Group chairman, is expected to come to Bucharest at the end of the month.
At the end of last week, the Privatisation Authority (APAPS), which holds more than 75% in Sidex, announced the signing of the sale-purchase contract for the stake was due in a few days. APAPS during the Government session on Thursday is to present a memorandum to authorise Sidex's privatisation commission to sign the privatisation contract with LNM on Friday.
Usinor in March announced that, along with Turkey-based Erdemir and Germany-based Salzgitter, it would place a bid for taking over the management of the mill for two years, in order to "prepare it for a second privatisation."
The French grounded their decision on the plant's uncertain financial situation, saying they could not make the right decision unless they were present at Sidex for a longer period of time.
The representatives of the French-German-Turkish concern at the time said Sidex was a weak player in terms of its relations with suppliers and clients and that it was having trouble with its working capital.
The French also said the amount of investments the Romanian authorities required from the future Sidex owner, that is $500-600 million, was outrageously high. They explained the giant in Galati needed restructuring and a new management conception to become profitable first.
Usinor specialists felt Sidex did not necessarily need technological investments, but a better production policy, in line with the market demand.
