IDC reportedly offered up to R3 billion for 80% of ArcelorMittal South Africa — TimesLIVE
In South Africa, the state-owned Industrial Development Corp (IDC), according to TimesLIVE, offered between R2.8 billion and R3 billion for 80% of ArcelorMittal South Africa (Amsa). Sources familiar with the negotiations told the publication that the parties had agreed on almost all terms, including the price, but the deal is being delayed by a dispute over the company’s BEE partner, Likamva Resources.
Dispute over Likamva
According to TimesLIVE’s sources, Amsa does not want to include Likamva Resources in the deal. Likamva holds a 17% stake under a 10-year agreement that expires at the end of the year. At the same time, Luxembourg-based Mittal Group owns 67% of Amsa.
One source told the publication that Amsa’s local management wants to postpone the announcement of the agreement until December or January, when the deal with Likamva expires. According to the source, BEE-linked shareholders may vote against the deal and go to court after it is announced.
Amsa declined to comment on the details, referring to its August 28 statement that negotiations with IDC were at an advanced stage. IDC told the publication that it continues discussions with Amsa, ArcelorMittal Group and government partners, including South Africa’s Department of Trade, Industry and Competition, on a long-term solution to the steelmaker’s problems.
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Funding and jobs
TimesLIVE sources also said that Amsa had approached IDC for an additional R300 million to avoid the planned retrenchment of 300 workers. Two years ago, IDC provided the company with R1 billion in funding, and last year it provided a further R1.68 billion to defer the winding down of long-products production.
Over the past two financial years, Amsa has incurred losses of more than R5 billion. In the six months to June, its EBITDA loss increased to R409 million from R110 million a year earlier, while headline losses amounted to R1.48 billion. Amsa’s long-products division employs 3,500 people in Newcastle and Vereeniging.
Under the terms of the proposed deal, Amsa must meet the Competition Commission’s requirement of no staff cuts. One TimesLIVE source said that the Department of Trade, Industry and Competition supports the agreement because jobs in Newcastle could be at risk.
