We had to write in our financial report that PHS was indeed worth USD 519m. This price was suitable in the moment of the transaction. Hadn’t we done that, we would have to have USD 886m of net loss for 2004 in order to equal the book value of PHS with its market value, representatives of investor relations in Mittal Steel told “Puls Biznesu”.

Mittal Steel has in its balance USD 886m as negative goodwill. The value of the Polish company may be higher than when negotiations were conducted between the government and the investor.

It is a similar case as with PKN Orlen which bought Unipetrol. Orlen underestimated Unipetrol’s assets and their value turned out to be much higher than the transaction price. Both transactions were made in weak period, followed by rapid increase of steel and oil prices, which could cause an increase of their assets, Sebastian Slomka, BDM PKO BP analyst said.

In the PHS privatisation process, the agreement was signed in October 2003, or two weeks before the market rebounded. PHS’s capitals increased from PLN 2.6 billion in 2003 to PLN 5.2 billion in 2004 (EUR 1.3 billion). It was mainly due to increasing net income from PLN 68m to PLN 1.7 billion.

(PLN 1 = EUR 0.254)(USD 1 = EUR 0.832)