(Updates with closing share price in eighth paragraph.)
Jan. 27 (Bloomberg) -- Serbia said it will buy back U.S. Steel Corp.’s plant for $1, eight years after the largest American steelmaker acquired the assets.
U.S. Steel will leave no debt behind and will sign the sale agreement on Jan. 31, Prime Minister Mirko Cvetkovic said today, speaking to reporters in Belgrade.
The company is exploring all options related to its Serbian operations, Erin DiPietro, a spokeswoman for U.S. Steel, said in an e-mailed statement today. She said the company doesn’t comment on other parties’ statements.
The Serbian unit was known as Sartid a.d. until it was acquired by Pittsburgh-based U.S. Steel from Serbia for about $23 million in a deal completed in September 2003. U.S. Steel Chief Executive Officer John Surma said on an Oct. 25 conference call that the company was not satisfied with its “poor” financial results in Serbia and was “evaluating all options to improve our situation.”
U.S. Steel said at the time of the deal Sartid could produce 2.2 million metric tons of steel annually. The plant is producing 1 million tons, Deputy Finance Minister Dusan Nikezic told reporters today.
“Even in a stronger economy, we’ve felt this business was an ‘orphan’ business, and poorly positioned as a spot buyer of raw materials in a market competing with integrated players,” Michelle Applebaum, managing partner at consultant Steel Market Intelligence in Chicago, said in an e-mail today. “This transaction is a very good idea.”
U.S. Steel Serbia said in an e-mailed statement yesterday that economic conditions in southern Europe were “very difficult,” and financial results in Serbia have been “unacceptable.”
U.S. Steel rose 1.7 percent to $29.88 in New York.
“We will start looking for a new strategic partner” for the plant on Feb. 1, Cvetkovic said. The government is trying to find a “suitable buyer” and will keep the plant’s production level unchanged, he said.
“The existing owners had a loss of around 100 million euros ($132 million),” he said.
--Editors: Jessica Resnick-Ault, Simon Casey
To contact the reporters on this story: Gordana Filipovic in Belgrade at firstname.lastname@example.org; Sonja Elmquist in New York at email@example.com; Misha Savic in Belgrade at firstname.lastname@example.org
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