The Slovak government has said it will likely open talks with other investors interested in bidding for a capital entry into troubled eastern Slovak steelmaker VSŽ. The cabinet said it had been disappointed with the amount offered for a stake in VSŽ by American steelmaker US Steel, which held negotiations with its Slovak counterparts in London from July 6-7.
Deputy Prime Minister for Economy Ivan Mikloš told the SITA news agency on July 13 that after talks with senior VSŽ officials, the government would "probably" now court other investors. Mikloš did not elaborate what other companies might be interested in a capital entry into VSŽ.
US Steel's framework bid for capital entry into VSŽ was also unsatisfactory for VSŽ's creditor banks, who according to the daily paper Pravda had been expecting that the US Steel capital injection would be used to repay 60-70% of VSŽ's outstanding loans.
VSŽ has been encircled by creditors since defaulting on a $35 million syndicated loan last November. VSŽ President Gabriel Eichler and chairman of the VSŽ Board of Directors Vladimír Repčák told cabinet on July 13, however, that a standstill agreement with VSŽ's nine creditor banks is about to be signed. VSŽ representatives and the Coordination Committee of Banks representing creditor banks met in London last week.
The government, too, has indicated that it is close to signing an agreement with VSŽ's creditors that would commit the state not to act independently of the banks in trying to recover its loans to VSŽ. The agreement, which is due to be signed "in the next few days," also secures the government's participation in the process of selecting a strategic investor, as well as its representation in VSŽ.
Despite the preparations of the state and VSŽ's creditors, however, US Steel's interest in VSŽ seems to be waning. Following the London meeting between senior VSŽ and US Steel representatives, Deputy Finance Minister Vladimír Podstranský reported that US Steel has not requested that its 'exclusivity period' for negotiating a capital entry into VSŽ be prolonged.
-from press reports
2. Aug 1999 at 0:00 | Tom Nicholson