Ukrainian firm wins steel mill tender for $801 million

A Ukrainian corporation controlled by President Leonid Kuchma's son-in-law won a privatisation tender on Monday to buy the country's largest steel plant, Kryvorizhstal, the State Property Fund said.
"The tender commission completed its work. Investment and Steel Union was chosen as the winner of the tender," said Mykhailo Chechetov, head of the fund, at a news conference.
"The winner paid 4.26 billion hryvnias ($801 million). I have already signed a purchase and sale agreement and payment documents on transferring the funds to the budget."
Leftist opposition deputies have protested the sale, accusing the authorities of trying to sell the plant to so-called oligarchs - powerful businessmen with links to politics.
Investment and Steel Union was set up by Viktor Pinchuk, Kuchma's son-in-law and a powerful businessman with interests in the steel, energy and media sectors, and Rinat Akhmetov, Ukraine's richest man and president of Shakhtar soccer club.
Two other Ukrainian firms, two Russian firms - Severstal and Evrazholding - and a Western consortium including Anglo-Dutch group LNM and United States Steel Corporation also bid for the company.
The starting price was 3.806 billion hryvnias.
The winning investor will also have to pay Kryvorizhstal's debts and improve social security for the plant's 56,000 employees.
Russia's Severstal had previously said in a statement it was ready to pay up to $1.2 billion for the company, which produces about 20 percent of Ukraine's total steel output and is a leading exporter.
Chechetov said only two Ukrainian companies - Investment and Steel Union and steel corporation Industrial Donbass Union - met all the conditions of the tender.
Some foreign investors complained that conditions were discriminatory, including one that the winner must have been a consumer of Ukrainian coke for the last three years.
Foreign investors have also complained about the lack of transparency, clear privatisation rules and stable legislation.
Ukraine, a former Soviet state with 48 million people, has so far failed to achieve any major success in privatising large state assets due to political bickering.
The government has raised a total of 5.3 billion hryvnias from privatisation so far this year, Chechetov said.