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Economic Briefs

US Steel still interested in buying VSŽ
Slovak Eurobonds may be listed on Asian markets
Tatra Banka given license to provide mortgages
SPaP shipping company reports small profit for 1999
Slovak breweries produce 4.4 million hectoliters in 1999
Labour strike threat hovering over Slovak Railways

US Steel still interested in buying VSŽ

US Steel said on February 9 that it remained interested in buying a majority stake in troubled Slovak steel maker VSŽ even though its bids had so far been rejected as being too low. "We remain highly interested in reaching an agreement," US Steel spokesman Thomas Ferrall told reporters. "We still think US Steel and VSŽ can make a good fit." The American steelmaker submitted its second offer for entry into VSŽ in early February.
US Steel has been holding talks on acquiring a stake in the Slovak steel producer since it ran into financial trouble late in 1998. Currently, VSŽ indebtness is around $450 million. The company's creditors forced in new management at the time of the crisis to prepare VSŽ for the entry of a strategic partner.
But while declaring interest in continued negotiations, the giant American firm also said thought that Deutsche Bank, which has been commissioned to coordinate the selection of a strategic partner for steelmaker VSŽ Košice, had set too high a price for acquiring a stake in VSŽ.
"We consider the price proposed by Deutsche Bank to be too high," said Ferrall. "Differences are especially apparent in the ways Deutsche Bank and US Steel set the value of VSŽ."
US Steel's latest offer stemmed from its analysis of VSŽ's performance over the last 10 years and estimates for the next five years. The proposal of Deutsche Bank was mostly based on recent improvements in the financial operations of VSŽ in the last two or tree months and is also enchanced by projected results in 2000 to 2004.
"VSŽ's value, calculated on the basis of such an analysis, would be significantly higher than our offer and would place VSŽ as one of leading posts among metallurgical companies in western Europe," Ferrall said. "Unless VSŽ has a production capacity with added value, it is impossible to set the value over our offer."
According to Ferrall, the present positive results of VSŽ came from overall economic growth on the European steel market, rather than extraordinary improvements at VSŽ.


Slovak Eurobonds may be listed on Asian markets

The Finance Ministry announced on February 9 that the arrangers of Slovakia's euro-denominated bond issue will be J.P. Morgan and Deutsche Bank. The Slovak government wants to borrow 500 million euros in an issue scheduled for the first half of the year.
The Eurobond is expected to be listed on Euro-zone markets as well as in Asia. The bond's maturity should be from 7 to 10 years. According to Finance Ministry spokesman Peter Švec, the ministry plans to use the acquired volume to settle old state debts. The magazine Emerging Markets Investor labeled the Slovak Eurobond issue the best issue in central Europe.


Tatra Banka given license to provide mortgages

The National Bank of Slovakia (NBS) has granted the privately-owned Tatra Banka a license to provide mortgages, announced Tatra Banka spokeswoman Adela Laktišová on February 9.
Ivan Bednár, speaking for Tatra Banka's marketing department, said that the bank was preparing for the launch of this service. "The terms under which we will provide these loans aren't known yet," he said. "It is also hard to say when exactly we will trigger the service."


SPaP shipping company reports small profit for 1999

Preliminary results indicate that Bratislava-based shipping company Slovenská Plavba a Prístavy ended 1999 with a gross profit of 5 million crowns ($120,000). The company's general director, Pavel Šesták, said on February 9 that the firm's poor performance last year was due to the blockage of the Yugoslav stretch of the Danube River as a consequence of the Kosovo war. Transport of goods to and from Yugoslavia was completely halted, and the company has been making a loss since the beginning of the war in March 1999.
"The entire company loses about 30.6 million crowns in revenues every month," said Šesták.
In February 1999, the company owned 250 river cargo vessels, 10 vessels for transporting passengers on rivers, and three ocean-going cargo vessels. Its share assets were 2.5 billion crowns. By the end of 1999 it employed 1,582 people.


Slovak breweries produce 4.4 million hectoliters in 1999

In 1999, breweries in Slovakia produced 4.4 million hectoliters of beer, up 20,000 hectoliters compared to the previous year, according to Michal Pramuk, executive director of the Slovak Brewers Association. However, Pramuk added that beer exports continued to decrease in 1999, which was the biggest cause of concern for the breweries.
Pramuk said that breweries had hoped to produce five million hectoliters of beer in 1999 in order to become profitable. "Because the import quota on beer is 532,000 hectoliters from the Czech Republic, a decrease in exports and the revision to the excise tax law on spirits which supports more expensive beer with higher alcohol content, we failed to meet this target," he said.


Labour strike threat hovering over Slovak Railways

If Slovak Railway (ŽSR) bosses do not meet the demands of the Railway Trade Union (OZŽ), an announced strike alert might become a reality similar to the strike that Hungarian railway workers recently announced, OZŽ chair Peter Rozložník said on February 8.
The OZŽ announced a strike alert on February 4, saying that if parties failed to reach an agreement by February 20 (the deadline set by law), the trade union can announce a strike.
The main demand of the railway workers is for a 13% increase in wages and a more favourable solution for workers than planned layoffs.
ŽSR Director Andrej Egyed has said that the ŽSR couldn't comply with the trade union's demands because implementing them would ruin the company. According to Egyed, ŽSR cannot promise an average wage increase until it acquires the necessary financial resources.


Compiled by Daniel J. Stoll
from SITA and Reuters

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