Belgrade, Dec. 28, 2001 - The Serbian government said it choose France's Lafarge, Greek Titan and Swiss Holcim as strategic partners for purchasing 70 percent of three cement plants of Beocin, Kosjeric and Novi Popovac, for a total $138.9 million.
"The total investments in the three cement plants are $145.9 million and all three strategic partners submitted very good social programmes," Serbian Minister of Economy and Privatisation Aleksandar Vlahovic said at the press conference. "We have fulfilled the plan for 2002 in terms of privatisation."
Lafarge is to pay $50.89 million for its 70 percent stake in Beocin, Holcim $52.5 million for Novi Popovac, and Titan Cement $35.5 million for Kosjeric, Vlahovic said. In addition, Lafarge would take over debts of $19.6 million, Holcim $36.6 million and Titan $1.079 million, he said.
A total of $14 million of these liabilities were debt of Beocin and Novi Popovac to the Paris Club of sovereign creditors who granted a phased 66 percent write-off of Yugoslavia's $4.5 billion in debt last month. Vlahovic said the buyers would immediately pay off the entire debt of both firms and Serbia would assume responsibility to service the debt to the Paris Club.
Negotiations on technical details are due to start just after the New Year's holidays and contracts will be signed by the end of January, he said.
"The buyers are now known and we won't discuss the price but guarantees and indemnification details," Vlahovic said. "We are very interested in guarantees for promised investments."
Lafarge offered to invest $32.26 million in Beocin, Titan's offer for Kosjeric was $29.68 million and Holcim's proposed investment in Novi Popovac was $83.9 million. Five-year investment plans are backed by detailed technical documentation and Vlahovic said he expected no problems.
The Serbian government said it was counting on some $160 million in privatisation receipts for its 2002 budget.
"With these privatisations, Serbia will secure $138.9 million in direct receipts for the budget," said Vlahovic. "Finance Minister Bozidar Djelic will soon have to admit that he had underestimated privatisation receipts and rebalance the budget for 2002."
Serbia launched an international tender in October to sell majority stakes in the Beocin, Novi Popovac and Kosjeric cement plants, the first privatisation attempt since the new law on privatisation was adopted in June. The financial and legal advisers in the process were HSBC Investment Bank and CMS, Strommer Reich-Rohrwig Karasek Hainz.
The social programmes for three cement plants consisted of three basic parts. The first clause was not negotiable, and all bidders had to agree on the following: the purchased company cannot be sold within 5 years time, nor it can be divided into parts and then sold, a minimum level of production must be maintained, no lay offs are permitted in the next five years and the buyers need to finance retraining of workers, and minority shares can be purchased from the workers only at the same price as majority shares.
Lafarge is also obliged to maintain the visual identity of the Beocin plant for another 25 years, to raise wages by 10 percent once it becomes owner, to distribute two percent of net profits as to employees as a bonus and to build 10 to 20 apartments per year. It will also finance the local municipality with 0.8 percent of profits between 2002 and 2006 and to thereafter with 0.6 percent until 2011.
Holcim must raise wages by 2.5 percent, divide 5 percent of net profits per year among employees, build 20 apartments and finance the local municipality with two percent of yearly income.
Titan plans to raise wages by 10 percent, distribute five percent of net profits, build three apartments per year over the next five years and in the same period to give 7.1 million deutsche marks to the local municipality. It also obliged to provide health insurance for workers and their families.
