Novolipetsk Iron and Steel Corporation (NLMK) said it would pay $805 million for a 50 percent stake in its joint venture with Duferco Group. The new company, called Steel Invest & Finance S.A., will be managed by Duferco. It will be registered in Luxembourg.
This will be a limited liability company. NLMK will finance the transaction out of existing cash funds. The transaction is expected to close before the end of this year. The joint venture will hold 100 percent or majority interests in 22 companies currently owned by Duferco. This includes one steel plant and five steel rolling facilities with total output of 4.5 million tonnes in 2006.
Duferco management will be responsible for operational, financial and technical issues, as well as for relations with employees, trade unions and local communities. NLMK and Duferco agreed to allocate EUR 375 million for the modernization and expansion of the joint venture’s production facilities. The project, estimated at about $1.5 billion, was approved by the European Commission on 21 November.
Novolipetsk Steel said earlier that the joint company would purchase some of Duferco’s production facilities in Europe and the United States, including Duferco Farrell Corporation (USA), Carsid SA (Belgium), Duferco Clabecq SA (Belgium), Duferco La Louviere SA (Belgium), Duferco Coating SAS (France), Sorral SA (France), Acciaierie Grigoli S.p.a. (Italy) and Duferco Transformation Europe (France).
NLMK’s authorized capital is divided into 5,993,227,240 ordinary shares with a nominal value of RUR 1. The main shareholders in NLMK are Silener Management Limited (18.98 percent), Merobel Investments Limited (18.70 percent), Ultimex Trading Limited (14.91 percent), VEFT Enterprises Limited (8.25 percent), Castella Investments Limited (15.94 percent), and LKB Invest (7.52 percent).