May 4 2007
NLMK-Duferco JV has reached a definitive agreement with Winner Steel INC. and its controlling shareholder to acquire substantially all the assets of Winner Steel INC. and certain of its liabilities.
The acquisition will be effected through Duferco U.S. Investment Corporation, a wholly-owned subsidiary of Steel Invest & Finance S.A. (Luxembourg), a 50/50 joint venture between the Duferco Group and NLMK. The acquired assets and liabilities will be held by Duferco U.S. Investment Corporation through a newly created entity, Winner Steel LLC.
The total acquisition price, including the assumed liabilities, is estimated to be approximately USD211.6 million, subject to a working capital adjustment based on the closing balance sheet.
NLMK-Duferco JV is now discussing with Esmark the possibility of granting Esmark or its affiliates a 6-months option to acquire up to 50% Winner Steel LLC at NLMK-Duferco JV cost plus agreed interest.
Winner Steel is one of the largest independent galvanized steel producers in the United States. Its operations are located on a single site in Pennsylvania and include three galvanizing lines with combined annual capacity of around 1.2 million tonnes and production in 2006 of around 0.6 million tonnes. Winner Steel’s revenues in 2006 were around USD427 million.
The acquisition of Winner Steel will result in further downstream expansion for the NLMK-Duferco JV Farrell facility, which, being located next to Winner Steel, has historically been one of its major suppliers of cold-rolled substrate. The transaction is expected to result in substantial synergies for the Farrell facility and is viewed by NLMK-Duferco JV as a good alternative to the construction of a galvanizing line at the Farrell site.
The closing of the transaction is expected in June, 2007.