Ontario Steel Investment Ltd, a group that includes shareholders of Essar Global, said on Tuesday that it had submitted an offer for the purchase of U.S. Steel Canada Inc, which has been in creditor protection since 2014.
The offer includes the assumption of $954 million (US$725 million) in liabilities under U.S. Steel Canada’s pension plan and a commitment to provide $25 million toward post-employment benefits for U.S. Steel Canada’s past and present staff.
U.S. Steel Canada, which employs nearly 2,000 workers in Ontario and has the capability to produce 2.6 million tons of steel annually, is a former unit of United States Steel Corp.
The United Steelworkers (USW) union had criticized U.S. Steel for its decision to eliminate Essar Global, an Indian energy and resources conglomerate, as a potential buyer of U.S. Steel Canada’s operations in Hamilton and Nanticoke, Ontario.
Ontario Steel Investment said it remained in active discussions with the USW regarding its offer and looked forward to continuing discussions with the province of Ontario.
“Our offer is the culmination of 18 months of discussions with all of the key stakeholders to find the best outcome for the business,” it said.
In a separate deal, Ontario Steel Investment announced in July that it had agreed with the union to negotiate the framework of a US$900-million purchase of Essar Steel Algoma Inc. Algoma, bought nearly a decade ago by Essar Global, was put up for sale while operating under creditor protection.
The union’s support is required for the bids to be successful.
Ontario Steel Investment, set up as an investment vehicle, could combine the two businesses if both bids succeed.
The offer for Essar Steel Algoma, which employs 3,400 workers and has the capability to produce about 4 million tons per year, was submitted to a court-appointed monitor and the company’s advisers on August 5, Ontario Steel Investment said on Tuesday.
New York private equity firm KPS Capital Partners withdrew from bidding for both U.S. Steel Canada and Essar Steel Algoma in July. It had also planned to combine the businesses but had been unable to reach agreement with stakeholders.
(Reporting by Matt Scuffham; Editing by Jeffrey Benkoe)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Reuters/Mike Cassese