Russia’s EvrAzHolding Group Withdraws from Privatization Deal

EvrAzHolding Group S.A., one of the leading steel production and mining businesses, which  operates mainly in Russia, announced on June 20 that it is withdrawing from the privatization of Georgia’s Chiaturmanganumi, a manganese mining factory in Chiatura, and a Vartsikhe hydro power plant.
 
“Following detailed expertise, EvrAzHolding concluded it would be unable to generate returns in line with its hurdle rate for acquisitions,” the press release issued by the EvrAzHolding on June 20 reads.
 
The company also reports that the Georgian government accepted this decision with “understanding.” 
 
However, the Georgian Economy Minister, Finance Minister and State Minister for Economic Issues, who were convened to the Parliament on June 20, said EvrAzHolding has not officially notified the Georgian government over its intentions yet.
 
“We have not received any official document yet. In any case, we are ready to continue consultations with other participants [of the tender] and bring the process to an end,” Economy Minister Lexo Alexishvili told reporters on June 20.
 
The Georgian government accepted the decision to sell the Chiaturmanganumi and Vartsikhe hydro power plant to the Russian EvrAzHolding and Austrian-Georgian DCM-Ferro, after these companies applied with the joint bid of USD 132 million. 
 
“Even if the deal is disrupted, this sum [USD 20 million] will remain in the account of the state budget,” Lexo Alexishvili added.
 
In April the Parliament approved draft amendments to the 2005 state budget envisaging an increase in budgetary expenditures by 452 million Lari (approximately USD 245.6 million), basically owing to revenues that are anticipated, mainly from the privatization process. But this refusal by the EvrAzHolding might affect these increased budgetary targets.

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