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By John Helmer in Moscow

Banking sources in Moscow are reporting that the sale of the Lucchini assets of the Severstal group, controlled by Alexei Mordashov, is not imminent.

According to the sources, a precondition of the transaction is a refinancing or renegotiation of the terms of Lucchini’s current debts, estimated to be about €800 million. Severstal has confirmed it is discussing the Lucchini sale to several interested buyers, including Metinvest of the Ukraine. Tata Steel (India), Baosteel (China), Gruppo Riva (Italy), and ArcelorMittal (Euro-India) have also been reported as interested to bid. Baosteel, Metinvest and Gruppo Riva are viewed in Moscow as having the most free cash to spend to pay the Severstal asking price.

Severstal bought Lucchini from Mordashov’s private companies, which had first acquired the assets in 2006, and then sold them on in 2007 for the company price equivalent of €1.1 billion. Reports endorsed today by Moscow investment bank Uralsib indicate that Lucchini has recently borrowed about €300 million for upgrading its Piombino, Tuscany, mills.

Valuation of the Lucchini assets for sale will not be possible until after the aggregate of debts, most of them owed to Italian banks, has been reorganized. Deutsche Bank has been reported as an advisor to the new sale talks.

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