Commercial Metals Bids to Acquire Croatian Mill

Commercial Metals International AG, a subsidiary of Commercial Metals Co., is looking to acquire the Croation company Valjaonica Cijevi Sisak from the Croatian Privatization Fund.

CMC is one of two bidders who submitted qualified bids in connection with the proposed privatization of the electric furnace steel pipe mill. Sisak currently has production capacity of around 70,000 metric tons and about 300,000 metric tons of tubular manufacturing capacity in its existing product line.

CMC's bid includes the assumption of debt due to or guaranteed by the Croatian government of about $32.2 million as well as the assumption of existing trade payables and a minimum purchase price for all Sisak shares of about $6.6 million with potential additional payments of about $7.9 million. The bid is subject to execution of a definitive purchase contract.

In addition to continuing the existing operations at the mill, CMC contemplates future expansions including capital expenditures and working capital increase of at least approximately $62.1 million. The existing level of the employee work force, less normal retirements or other natural attrition, will be retained for a minimum of two years.

Hanns Zoellner, president of CMC's Marketing and Distribution segment, stated, "We are very excited about the prospects for Sisak and look forward to promptly commencing discussions with the Fund to conclude a purchase contract. With the experience and success we have enjoyed following the acquisition of a majority interest in CMC Zawiercie, our Polish mill, we are confident we can achieve the same results in Croatia.

CMC's marketing group annually markets close to 500,000 metric tons of tubular products globally and has previously sold pipe products produced by Sisak."