|
|
 |
Severstal Buys American WCI Steel
Severstal is buying another American asset. This time, it is WCI Steel, for which it is paying a maximum of $140 million. As of April 30 of this year, WCI had a debt of $327 million. The company’s stock is divided among portfolio investors, and it is unclear how much of it Severstal will be able to acquire. The deal has been approved by the United Steel Workers union and the majority of shareholders, however. The stock is traded over the counter, and Severstal received a price that was 40 percent below the market rate. On Friday, the day Severstal signed a purchase agreement with the WCI board of directors, the price of WCI stock fell 45.45 percent to $3 a share.
WCI makes a special high-quality steel for the auto industry, construction and energy, as well as household appliances and furniture. It has a capacity of 1.2 million tons of steel per year. It is Severstal’s fourth U.S. asset. In 2003, it bought the bankrupt Rouge Industries for $285.5 million and renamed it Severstal North America. In 2007, Severstal became a shareholder in SeverCorr and subsequently increased its share to 85 percent. In April 2008, it bought the Sparrows Point plant for $810 million. Severstal, now America’s fourth largest steelmaker with regional output of 10.8 million tons, plans to integrate WCI into its American production chain by 2012 and earn $24 million from the synergistic effect.
Analysts do not share Severstal’s optimism. They note that WCI, which has been bankrupt since 2006, will require significant investments to return to normal operations. Severstal’s profitability will be unavoidably reduced during that process. The acquisition of bankrupt assets is an established Severstal strategy. The industry as a whole may be growing, however.
www.kommersant.com
All the Article in Russian as of May 19, 2008
|
|
|
