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Croatian Government Accepts CMC’s Mill Bid

04/30/2007 - Commercial Metals announced that its second bid to acquire Valjaonica Cijevi Sisak (VCS) has been accepted by the Croatian Privatization Fund and Croatian government. The April 17, 2007 bid was submitted via Swiss subsidiary, Commercial Metals International AG.  

Commercial Metals Co. announced that its second bid (dated April 17, 2007 and submitted via Swiss subsidiary, Commercial Metals International AG) to acquire Valjaonica Cijevi Sisak (VCS) has been accepted by the Croatian Privatization Fund and Croatian government.
 
CMC's bid includes the assumption of all VCS debt, which totals over HRK 250 million (approximately U.S. $45 million) toward the Croatian government, banks and trade creditors. The bid also includes HRK 10 million (about U.S. $2 million) for the shares or alternatively HRK 37 million (approximately U.S. $7 million) subject to termination and indemnity with regard to certain alleged contract obligations as well as a capital expenditure program worth U.S. $38 million over a five-year period. CMC also assumes the obligation of retaining the VCS employees for a period of three years.
 
"We are very glad the Croatian government has accepted our offer, and we look forward to concluding quickly the transaction and signing the share purchase agreement,” said Hanns Zoellner, President of CMC's Marketing and Distribution segment. “Through better utilization of existing capacities and increasing sales through our Marketing and Distribution group, we believe the pipe mill will become a profitable operation in line with our corporate financial targets. Our plans comprise investment into environmental areas and improvements in the steelmaking operation through installation of a new electric arc furnace and a ladle furnace and upgrades to the caster. Our strategy is to expand CMC's production capability in tubular and other products in the key markets of Central and Eastern Europe using VCS as a base for our growth in this dynamic region of Europe.
 
CMC’s bid is subject to execution of a definitive purchase contract.
 
Valjaonica Cijevi Sisak is an electric arc furnace based steel pipe company with an annual pipe-making capacity of about 305,000 tonnes.
 
Headquartered in Irving, Texas, Commercial Metals Co. and subsidiaries manufacture, recycle and market steel and metal products, related materials and services through a network including steel minimills, steel fabrication and processing plants, construction-related product warehouses, a copper tube mill, metal recycling facilities and marketing and distribution offices in the United States and in strategic overseas markets.