March 23, 2020 / 4:55 PM / 12 days ago

Bosnian region to accept improved bid for foundry lease

SARAJEVO, March 23 (Reuters) - A regional government in Bosnia will accept an improved offer from an Israeli-Chinese consortium to lease the foundry of indebted aluminium smelter Aluminij Mostar, officials said on Monday.

The deal would be the first step towards restarting production at the smelter which was shut down last July over debt incurred due to high electricity and alumina prices.

The Bosniak-Croat Federation government had rejected three previous proposals from the consortium of Israel’s M.T Abraham Group, China Machinery Engineering Corporation (CMEC) and China Non-Ferrous Metal Industry’s Foreign Engineering & Construction.

“This is a completely different offer,” a government source, who declined to be named, told Reuters. He said the regional government, which owns a 44% stake in the company, would accept the offer formally at its session on Tuesday.

Dragan Covic, the leader of the Bosnian Croat ruling Croatian Democratic Union (HDZ) party and a deputy in the national parliament, also told N1 television the regional government would approve the deal.

An attempt to find a strategic partner for the smelter failed after London-listed miner and commodity trader Glencore and other investors pulled out of talks on a possible takeover.

Aluminij’s small shareholders, who own 44% of shares, had also rejected the Israeli-Chinese consortium’s last offer, saying it was too low.

The regional government said previously the consortium had requested subsidised electricity prices and government guarantees for all future loans, which it was not ready to provide.

The new offer does not ask for government subsidies, the source said. He added the lease was agreed initially for two years and the deal would be off if the terms of the contract were broken.

Aluminij, which laid off all of its 900 workers in January, accumulated debt of almost 380 million Bosnian marka ($208 million), most of it to the local EPHZHB power utility.

1$ = 1.826 Bosnian marka Reporting by Daria Sito-Sucic; Editing by Mark Potter

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