Steel Mills
Two Bidders Contending for US Steel Canada
Written by Sandy Williams
June 16, 2016
Two bidders continue to vie for purchase of the Hamilton and Nanticoke steel plants in Canada. According to the Hamilton Spectator, sources close to the sale confirm that Essar Group of India and KPS Capital Partners LP of New York are the final contenders for US Steel Canada.
KPS is also interested in gaining Essar Steel Algoma which could potentially open the way for a merger of the two companies. Sources say both bidders intend to operate and invest in US Steel Canada as a working concern.
The Essar Group, parent company of Algoma, was prevented by the CCAA process from bidding on Algoma when it failed to show proof of financial resources to complete a purchase. At the time (May 2016), Essar Group was looking to liquidate holdings to reduce its $15 billion debt. It has since negotiated the sale of a 49 percent stake in Essar Oil to Russian energy company Rosneft for an undisclosed amount and completed the sale of Water’s Edge residential project in Bangalore for $73 million (490 crore).
“The way I’ve heard it is that Essar is a strategic buyer, and that would be best for Hamilton, but it’s all based on borrowed money,” said University of Toronto steel expert Peter Warrian in a comment to Hamilton Spectator. “When Essar acquired Algoma they just loaded it up with debt.”
KPS is a hedge fund that has a history of rebuilding distressed companies and selling them a few years later for a profit. Restoring US Steel Canada to health would be a positive but some sources are concerned about the company being owned by a hedge fund.
Any buyer of US Steel Canada will have to contend with the shortfall in the US Canada pension fund as well as US Steel’s debt claims of $2.2 billion.
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Mills
Algoma fires up EAF steelmaking with first arc
Algoma Steel reached a milestone in its transformation from blast furnace to electric arc furnace (EAF) steelmaking, with its Unit One EAF achieving its first steel production this week.
Nucor holds HR list price at $910/ton
Nucor is keeping its list price for spot hot-rolled coil unchanged after last week’s shortened holiday week.
Cliffs unveils new hydrogen-powered stainless line in Ohio
CEO Lourenco Goncalves, flanked by state leaders and union reps, touted the project as proof that US manufacturing is not only alive, but also advancing.
Cliffs idles Steelton, Riverdale, and Conshohocken operations
Cliffs has idled facilities in Riverdale, Ill., and Conshohocken and Steelton, Pa.
Radius loss narrows, volumes climb in ‘healthy’ West Coast market
Stronger steel demand in the Western US, rising scrap flows, and improved rolling mill utilization drove sequential gains for Portland, Ore.-based Radius Recycling.