State Property Fund wants to take Kryvorizhstal from Arcelor Mittal

The State Property Fund of Ukraine has sent a letter to the Cabinet of Ministers of Ukraine, informing it that Arcelor Mittal, which bought the Kryvorizhstal OJSC state-owned shareholding, failed to fulfill the purchase and sale agreement. The SPFU also informed the government about necessity to allocate around 72.7 mln hryvnias for legal proceedings on denunciating the agreement.

According to the information of the State Property Fund’s press-service, an SPFU inspection, which probed into implementation of the Kryvorizhstal purchase and sale agreement on March 24-28 of 2008, recorded non-fulfillment of the agreement in the sphere of innovation-investment activities (reconstruction of ##3 and 4 coke-oven batteries), environmental activities (reconstruction of a plant for coke production cleaning), social activities (improvement of social conditions of workers at amount of not less than 0.5% of the annual receipts from production, etc.).

The press-service also noted that, on July 3, a Fund’s commission, having considered an appeal of Arcelor Mittal, made decision to remain the inspection conclusions unchanged.

According to the SPFU’s letter to the government, in line with the purchase and sale agreement, all disputes between the parties shall be solved in the International Arbitrary Court at the Commercial Chamber of Ukraine. The total of the registration fee due to be paid to the court makes 72 mln 724.9 hryvnias, according to calculations of the Fund.

Arcelor Mittal purchased its Ukrainian assets, formerly known as Kryvorizhstal, in October 2005 by spending more than $4.8 billion for 93% stake. This was Ukraine`s first transparent privatization auction and generated more cash for the government than any other selloff over the past 10 years.