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Privatisation Agency breaks Magnohrom sale contract
Belgrade,
18 December 2007
The Serbian Privatisation Agency terminated today the sale agreement for the company Magnohrom from Kraljevo with buyer Global Steel Holdings Ltd from the UK, and brought a decision on claiming payment of bank guarantee in the amount of €300,000 and contract penalty in the amount of €1,136,000.
According to the agency, inspection showed that the buyer did not maintain continuity of production, did not fulfill conditions from the social programme, and did not invest the sum envisaged for the first year of realisation of the contract.
Bearing in mind the situation in Magnohrom, the agency organised several meetings with representatives of the buyer, employees and local self-government, but Global Steel Holdings Ltd undertook no measures.
According to the statement by the agency, the production came to a halt and some of the existing facilities were put out of function, while new ones were not bought.
Bearing in mind the difficult social and material status of employees and their clear stand that it is not in their interest that the contract is terminated, the agency made several appeals to the new owner to reach an agreement with employees and fulfill contract obligations.
Following the regular inspection of fulfillment of these obligations and of audit report for the first year of business, the Privatisation Agency gave the buyer a deadline to fulfill obligations.
Global Steel Holdings Ltd did not manage to fulfill any of the conditions arising from the contract.
The Privatisation Agency, in accordance with the law, could not terminate the contract earlier, and will inform the public on further steps in privatisation of Magnohrom.
Bearing in mind the situation in Magnohrom, the agency organised several meetings with representatives of the buyer, employees and local self-government, but Global Steel Holdings Ltd undertook no measures.
According to the statement by the agency, the production came to a halt and some of the existing facilities were put out of function, while new ones were not bought.
Bearing in mind the difficult social and material status of employees and their clear stand that it is not in their interest that the contract is terminated, the agency made several appeals to the new owner to reach an agreement with employees and fulfill contract obligations.
Following the regular inspection of fulfillment of these obligations and of audit report for the first year of business, the Privatisation Agency gave the buyer a deadline to fulfill obligations.
Global Steel Holdings Ltd did not manage to fulfill any of the conditions arising from the contract.
The Privatisation Agency, in accordance with the law, could not terminate the contract earlier, and will inform the public on further steps in privatisation of Magnohrom.
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