Jan. 21, 2015
Esmark Wins Bid for Serbian Mill
Esmark, a U.S. service center company, will make its second foray into steel production after winning the bid to acquire Serbia’s Železara Smederevo Steel Works. Esmark Europe, B.V., the company launched as part of the bidding process, has begun to finalize the strategic partnership agreement with the Republic of Serbia to take a controlling 80.1 percent stake in the mill.
Esmark Europe expects to close the transaction by Feb. 1 and immediately begin to implement its revitalization program. A previous incarnation of Esmark acquired the now-defunct Wheeling-Pitt Steel Mill in 2008 before selling it to Russia’s Severstal.
“We are absolutely thrilled that the government of Serbia has selected us as their strategic partner. The Republic of Serbia conducted a fair and transparent privatization process, and we received remarkable support throughout the pre-tender and diligence process. We share in the vision of Prime Minister Alexsander Vucic to return Železara Smederevo to its former glory as an economic engine for the Serbian economy,” says James Bouchard, chairman and CEO of Esmark, Pittsburgh.
Bouchard says his company's strong balance sheet with more than $350 million in equity and no short- or long-term debt, previous management experience in Europe, and operational expertise will be invaluable in repositioning Železara Smederevo Steel Works as an efficient, low-cost producer of steel and tin-coated products across Central Europe.
“With our collective management experience in revitalizing the Kosice, Slovakia, steel mill, Železara Smederevo's strategic location and access to low-priced raw materials, and the synergies afforded by its double-reduced cold mill and tin facilities and Esmark’s U.S. tin plate operations, we believe we have the right formula for success,” he says.
As part of its commitment to the revitalization plan, Esmark Europe will invest approximately $400 million over the next five years for working capital, capital improvements and other investments. It will make an immediate infusion of $28 million this year to repair and modernize the steel mill’s second blast furnace, steel shop and sinter plant. Esmark Europe expects the blast furnace upgrades to complement the mill’s new $80 million pulverized coal injection plant. The company also pledged to maintain Železara Smederevo Steel Works’ workforce of 5,000 employees as a result of its restructuring and production plan.