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EBRD finances US$ 100 million in Romanian steel privatisation
Loan will support modernisation, privatisation of Sidex steel plant
A US$ 100 million loan from the European Bank for Reconstruction and Development will support the privatisation of Sidex, the large steel mill in Romania. The one-year revolving loan facility will help upgrade the mill's production facilities and reduce emissions.
The loan is being made to LNM Holdings BV, part of the British-Indian LNM Group, the fourth-largest steel group in the world. LNM has bought a majority stake in Sidex from the Romanian government. The EBRD has previously made a substantial loan to the LNM-owned Kazakh steel mill Ispat-Karmet to support its successful turnaround and modernisation.
Sidex is the largest company in Romania and represents 4 per cent of industrial production. Its privatisation has been widely regarded as critical to economic reform in Romania. This is the first time the EBRD has engaged in the restructuring of a large industrial company in Romania. It reflects the Bank's strategy for the country to engage directly in the privatisation and restructuring of state-owned enterprises in Romania.
Restructuring the steel sector will be crucial as Romania moves towards becoming a successful market economy, Ms Doyle said. Romania's handling of Sidex could prove an example for other accession economies whose steel sectors aren't yet restructured. In the EBRD's experience, Ms Doyle said, the effective restructuring of integrated mills such as Sidex requires sale to a strategic investor. That is exactly what Romanian has achieved.
The EBRD loan will provide working capital to Sidex, which should help eradicate the continued use of barter - a system of payment that risks undermining corporate governance and blocks economic progress. The successful privatisation of Sidex could signal a crucial turning point for the future industrial development of Romania, Ms Doyle said.
Sidex is located in Galati, eastern Romania on the Danube, some 80 miles up-stream from the Black Sea port of Constanta.
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