After raising handsome revenues from the sale of a 30 percent stake in the Mykolayiv Alumina Plant, the State Property Fund is preparing to make another bold leap toward this year's privatization target. The fund is to sell the government's 76 percent stake in a leading producer of oil and gas pipes, offering the package for a starting price of Hr 333.75 million ($61.2 million), privatization officials said on March 27.
The fund said it will formally announce a tender for the purchase of the share package in the eastern Khartsyzk Pipe Plant on March 29 and will be accepting bids until June 29. The winner must offer the highest price and a project for developing the plant, as well as have experience in metallurgy. Germany's Commerzbank will advise on the sale.
The Donetsk region-based plant is the ex-Soviet Union's only producer of large-diameter oil pipes with anticorrosion coating. The factory is also the sole manufacturer in Ukraine and Russia making gas pipes used by Russia's gas giant Gazprom, with the latter being the Khartsyzk's largest consumer. The plant's production last year amounted to about 226,000 tons of pipes and represented a 23.7 percent drop from 1998, according to Interfax.
The government controls 76 percent of the plant's shares, and the rest belong to various businesses and private investors. According to Valery Antonov, an analyst with Alfa Capital brokerage, the key force behind the plant now is Industrialny Soyuz Donbassa (ISD), a company that either manages or owns stakes in many factories in eastern Ukraine. ISD leases equipment to the Khartsyzk plant and is thought to hold a stake in the factory.
Antonov said Russia's Gazprom is another likely bidder for the stake in the plant. Though the Western interest in the pipe maker is also quite high, he said, few would want to 'negotiate with local structures.'
'I wouldn't be surprised if a subsidiary of ISD or Gazprom buys the stake,' he said.
The SPF is also expected to announce on March 29 a tender for a 65.41 percent stake in the Lviv Bus Plant, known as LAZ, with the starting price of the package close to Hr 12 million ($2.2 million). The winner of this tender must also promise to pay off the plant's debts of more than Hr 6 million ($1.1 million) and retain current staffing levels.
That last condition will deter many investors, as the buyer will effectively be asked to subsidize an inefficient enterprise, analysts said.
The plant, which has an annual capacity of up to 7,700 buses, produced only 234 vehicles last year, most of which were exported to Russia. Some 12.65 percent of its shares belong to plant management and workers, and the rest to various investors.
SPF Results
The fund on March 21 sold a 26.46 percent stake in the Dniprofarm pharmaceuticals company via the Ukrainian Stock Exchange. The buyer, little-known Hedge-Service company, paid some Hr 9.8 million ($1.85 million) for the stake, at a per share price of Hr 4.95 ($0.92).
Privatization News
Ukrspetsyust, a state-owned company overseeing court rulings, ordered the suspension of preparations to sell a large stake in the Kalush-based Oriana chemicals maker. A local court in Ivano-Frankivsk oblast earlier seized Oriana's assets after it announced the company bankrupt following a lawsuit by Shelton, a Ukrainian company which had earlier been granted the right to manage the government's stake in the plant. The SPF is planning to sell a 92.5 percent stake in Oriana for Hr 745 million.
Several foreign companies have announced they are considering buying an 89.47 percent stake in the Krymsky Soda Plant. The SPF commission overseeing the sale said Turkey's Sisecam, Belgium's Solvey and Britain's Brunner Mond are eyeing the stake, according to investment company Alfa Capital. The SPF has set the starting price for the stake at Hr 161.9 million.
The Ukrainian government will also sell 25 percent stakes in its Alchevsky coke plant and Alchevsky steel mill at the Donetsk Stock Exchange on May 17, the State Property Fund said on March 28. Both companies are located in the eastern Donetsk region.
The coke plant's charter capital, defined as the number of shares multiplied by the face value of one share, is Hr 52.99 million ($9.76 million). The company made a pre-tax profit of Hr 177 million in 1999, the fund said.
The charter capital of Alchevsky steel mill is Hr 53 million. The mill posted a pre-tax profit of Hr 6.11 million in 1999.
The fund gave no comparative figures for the previous year. The figures are calculated to Ukrainian accounting methods which differ significantly from those in the West.
Meanwhile Ukrainian Aluminum, the company that won a tender for a 30 percent stake in Ukraine's sole alumina producer Mykolayiv Alumina Plant (MAP), is seeking partners to set up a consortium to build a new aluminum smelter in Ukraine, a company official said on March 28.
'We are holding talks with companies that will fulfill our order to build the smelter,' German Tkachenko, senior executive at Ukrainian Aluminum, told a news conference.
Building an aluminum smelter with an annual capacity of 130,000 tons of primary aluminum was a major condition of the tender.
In line with the tender conditions, Ukrainian Aluminum must start construction no later than 2002.
