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Chinese are closer to taking over Košice steelworks

The sale may be completed early next year, according to reports.

U.S. Steel Košice(Source: Courtesy of USSK)

The sale of U. S. Steel Košice seems to be nearing its finale. Its owner, the American steel producer U.S. Steel Corporation, reportedly agreed to selling the plant to the He Steel Group for $1.4 billion (some €1.17 billion).

The Chinese company is expected to take over the company currently employing nearly 10,000 people, at the beginning of next year, the Sme daily reported.

It is also expected that several He Steel Group managers will move to Košice. No layoffs are planned for now, Sme wrote.

U.S. Steel Corporation and the He Steel Group will close the deal in the following weeks.

“We don’t comment on speculations,” U.S. Steel Košice’s spokesperson Ján Bača told the regional daily Korzár.

The whole deal may be prolonged and difficult as it will have to be approved by the anti-monopoly authorities not only in the European Union, but also in Turkey, the Trend economic weekly reported.

Read also:USSK remains in Košice, for now

In addition, the validity of a five-year memorandum between the Slovak government and U.S. Steel will expire next March. If U.S. Steel had wanted to sell the steelworks before this date, they would have had to pay a fine of $15 million. Robert Fico’s government has already said that in the case of a sale, it will try to obtain a minority share in the steelworks, Trend wrote.

The sale was delayed in early September, when the management of the American steelworks met with Chinese managers in China, Korzár wrote. The managment subsequently flew to Košice and informed the local managers about the outcome.

The Americans and the He Steel Group signed a memorandum of understanding in January, giving the latter the right to exclusive talks with U.S. Steel. There were other companies interested in the Košice-based plant, including the Czech Moravia Steel Group and another Chinese company called CEFC, which already controls a 50-percent share in J&T Finance Group.

While the Chinese company will purchase the Košice steelworks for more than €1 billion, it will have to invest more money into it as the plant is burdened with old investment debts. In the past nine years the Americans have invested some €820 million in Košice, mostly into environmental measures. Most of the machines are outdated, originating from the 1960s, Sme reported.

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