RTB sale crisis: A-TEC submits fresh offer

Austrian A-TEC has tabled a new offer last night at 23:45 CET, it has been confirmed. The consortium, which won a tender to buy eastern Serbia-based RTB Bor copper mining and smelting company, had until midnight yesterday to make the remaining payment of USD 316mn agreed in the contract signed last year. RTB sale crisis: A-TEC submits fresh offer The Privatization Agency, which is conducting the sale on behalf of the state, announced that the consortium would not meet the deadline, that its extension request was rejected, and that the deal had fallen through. But today, A-TEC said that "after intensive consultations with banks", it came up with a fresh offer: to pay USD 230mn immediately, while the remaining USD 86mn would be paid by May 7. Sources with the agency suggested that this new development will be "considered at the start of next week". The Austrians have already paid USD 150mn. Deutsche Bank is said to have been unwilling to provide the guarantees necessary to make the whole payment in time. The Privatization Agency said yesterday they will return neither the USD 10mn deposit, nor the USD 150mn installment to A-TEC, in case the acquisition contract was broken. Just as with Romanian Cuprom last year, the deal for the purchase of RTB Bor is running into trouble with financial guarantees. Earlier, A-TEC expressed its regret at having to pull out of the deal, explaining that "political instability in Serbia was one of the reasons why it had not been able to secure the necessary financing". Economy Minister Mladjan Dinkic said that it does not mean that the privatization had fallen through, but that negotiations will now begin with the second-placed bidder, Russian oligarch Oleg Deripaska’s SMR. Economists warn that the failure of another tender could have negative repercussions for the RTB copper mine. Yesterday, the Privatization Agency rejected the company’s application to pay USD 213mn of the 316mn instalment now, and to pay off the remainder in the next two months. A-TEC said in a statement that "political instability in Serbia and the global credit crunch had thwarted their bid to find the necessary funding", and that for this reason, they had had to pull out of the deal. “Contracts in Serbia have to be honored because if the investor is not in a position to honor contracts when it comes to paying prices that he himself has offered, how can you trust him to run the Bor basin properly, and make the investments stipulated in the contract in the coming period, particularly the USD 180mn or so for building the new foundry in Bor to finally put a stop to the environmental pollution." "Since he was unable to, even though we extended the deadline for him to make the payment in two instalments, it would be very irresponsible of us to trust him to meet his other contractual obligations. That’s why the Privatization Agency, in line with the law, will enter talks with the tender’s second-placed bidder,” explained Dinkic. President of the RTB independent trade union Dragan Aleksic told B92 that A-TEC’s decision to pull out was of no benefit to the company or the workers. “We have to work as we’ve worked up to now, we have to try with either the state or the second-place bidder, or with anyone, to obtain this investment that would be put into production. All we need is added investment, copper prices are extremely good, we’ve got experts, workers, everything else is up to us,” said Aleksic. Economist Milan Kovacevic told B92 that the repeated failure to privatize RTB Bor was a bad signal for potential buyers, as it was unclear whether they would be able to secure the necessary financing. “I expected the Agency to think twice before taking such a decision. Then again, things here have changed, and the political risk is somewhat higher than it was a while back when the tender was held. There could be more caution, and it might be a lot harder to get the desired terms at the next tender,” Kovacevic ventured. RTB Bor

RTB sale crisis: A-TEC submits fresh offer

The Privatization Agency, which is conducting the sale on behalf of the state, announced that the consortium would not meet the deadline, that its extension request was rejected, and that the deal had fallen through.

But today, A-TEC said that "after intensive consultations with banks", it came up with a fresh offer: to pay USD 230mn immediately, while the remaining USD 86mn would be paid by May 7.

Sources with the agency suggested that this new development will be "considered at the start of next week".

The Austrians have already paid USD 150mn. Deutsche Bank is said to have been unwilling to provide the guarantees necessary to make the whole payment in time.

The Privatization Agency said yesterday they will return neither the USD 10mn deposit, nor the USD 150mn installment to A-TEC, in case the acquisition contract was broken.

Just as with Romanian Cuprom last year, the deal for the purchase of RTB Bor is running into trouble with financial guarantees.

Earlier, A-TEC expressed its regret at having to pull out of the deal, explaining that "political instability in Serbia was one of the reasons why it had not been able to secure the necessary financing".

Economy Minister Mlađan Dinkić said that it does not mean that the privatization had fallen through, but that negotiations will now begin with the second-placed bidder, Russian oligarch Oleg Deripaska’s SMR. Economists warn that the failure of another tender could have negative repercussions for the RTB copper mine.

Yesterday, the Privatization Agency rejected the company’s application to pay USD 213mn of the 316mn instalment now, and to pay off the remainder in the next two months.

A-TEC said in a statement that "political instability in Serbia and the global credit crunch had thwarted their bid to find the necessary funding", and that for this reason, they had had to pull out of the deal.

“Contracts in Serbia have to be honored because if the investor is not in a position to honor contracts when it comes to paying prices that he himself has offered, how can you trust him to run the Bor basin properly, and make the investments stipulated in the contract in the coming period, particularly the USD 180mn or so for building the new foundry in Bor to finally put a stop to the environmental pollution."

"Since he was unable to, even though we extended the deadline for him to make the payment in two instalments, it would be very irresponsible of us to trust him to meet his other contractual obligations. That’s why the Privatization Agency, in line with the law, will enter talks with the tender’s second-placed bidder,” explained Dinkić.

President of the RTB independent trade union Dragan Aleksić told B92 that A-TEC’s decision to pull out was of no benefit to the company or the workers.

“We have to work as we’ve worked up to now, we have to try with either the state or the second-place bidder, or with anyone, to obtain this investment that would be put into production. All we need is added investment, copper prices are extremely good, we’ve got experts, workers, everything else is up to us,” said Aleksić.

Economist Milan Kovačević told B92 that the repeated failure to privatize RTB Bor was a bad signal for potential buyers, as it was unclear whether they would be able to secure the necessary financing.

“I expected the Agency to think twice before taking such a decision. Then again, things here have changed, and the political risk is somewhat higher than it was a while back when the tender was held. There could be more caution, and it might be a lot harder to get the desired terms at the next tender,” Kovačević ventured.