Bloomberg News

RHI of Austria Eyes Serbia’s Magnohrom, Privatization Agency Chief Says

March 02, 2012

RHI AG (RHI), the Austrian maker of fire- proofing ceramics, is interested in Magnohrom, Serbia’s sole basic refractory product manufacturer, Privatization Agency chief Vladislav Cvetkovic said.

“RHI informed us about their interest in Magnohrom,” Cvetkovic said in an interview late yesterday, adding that the agency is still preparing documentation for its sale, due later this year.

The agency is trying to find new owners at least for parts of the company, which in March 2011 restarted production of basic magnesia products used in steel, cement, and glass industries, after idling for four years. While Magnohrom was first sold to Pramod Mittal’s Global Steel Holdings Ltd. in 2006, the contract was canceled in 2007 after Global Steel failed to invest, revive production and reach agreement with workers as pledged under the contracts.

“RHI is looking into a number of acquisition opportunities including in Serbia,” said Elke Koch, a spokeswoman for the company in Vienna. “As a rule we do not comment on projects that may be of interest to us prior to agreement being reached.”

Austria’s WirtschaftsBlatt reported on Feb. 28 that RHI may buy a mid-sized competitor in Serbia before the end of the second quarter, citing an unidentified person at the company.

Privatization History

According to the Privatization Agency’s records, Serbia sold nearly 2,400 firms over the past decade as it tried to transform once socially-owned enterprises into private companies, hoping private ownership will improve their performance. The agency canceled 630 sale contracts in the same period as investors failed to live up to agreed terms of sale.

The government is now trying to find new partners to save jobs and make sure people get paid in an economy where unemployment rate is already 24.4 percent and average wages are less than 350 euros ($463) per month.

Prime Minister Mirko Cvetkovic’s cabinet, facing re- election by early May, has seen its popularity sink as economy slows and foreign demand for its exports weakens amid the sovereign debt crisis in the euro area.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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