Kralodovorske zelezarny a.s. is seeking a strategic partner. March 1999

There is no doubt that everywhere in the world industrial enterprises are evaluated not only according to the standard and competitive ability of its products, but also according to their price, quality and additional service. Metallurgical companies are no exception. Unfortunately many of these find themselves in an uneasy situation today due to the crisis in the metal market.

Companies that want to survive economically and build up a good position for themselves are electing a basic and quick solution. And it is also the intention of Králodvorské zelezárny a.s. (KZ) in Kraluv Dvur to find a strategic partner.

For this purpose Králodvorské zelezárny is working with Raiffeisen Investment AG (hereafter 'RIAG'), a well-known Austrian investment bank with the emphasis on privatization and investment consultancy. As a matter of interest, in the last five years RIAG has participated in more than 80 acquisition and privatization projects in central and eastern Europe where it is active. This renowned investment company, which has acquired a great deal of experience has to provide complete financial and business consultancy for KZ, starting with the compilation of information memorandum, and a number of other consultancy activities, leading to the eventual signing of a contract with an investor. Various options are available for this transaction - the entry of the strategic partner into KZ's parent company or into the individual subsidiary companies or a combination of both. Almost fifty per cent of the shares are prepared for a potential investor.

The reason why KZ is looking for a strategic partner can be explained briefly as an attempt to obtain additional financial capital during this period of rapidly changing technological, economic and business conditions on the market for the company's future economic growth, in particular for the running of its subsidiary companies, i.e. to find a partner, which will be able to further expand the range of products and provide effective access to foreign markets as well as being able to finance working capital as economically as possible. According to RIAG Prag's representative Pavel Burget, KZ has something to offer to a potential partner. There are company's assets, which can be developed and there is a manufacturing program, which can be of use under the right conditions.

The collaboration between KZ and RIAG has its own program and a clearly defined aim. At the moment RIAG Prag is preparing an information memorandum, which will be distributed to potential partners. 'I am optimistic that a strategic partner will be found for Králodvorské zelezárny', said Pavel Burget and he added that in his opinion KZ's management reacted timely and correctly to the rapid development taking place throughout the world. He also said that in cooperation with a strategic partner that is strong in capital will help to integrate the management, marketing, production and distribution, which will subsequently lead to the effective restructuring and overall competitive ability of the company.