Esmark to Sell Minority Interest in Wheeling Nisshin
03/10/2008 - Esmark Inc. has entered into an agreement to sell its 35.7% equity interest in Wheeling-Nisshin for $71.4 million.
Esmark Inc. has entered into an agreement to sell its minority equity interest in Wheeling-Nisshin, Inc., a joint venture with Nisshin Steel Co., Ltd.
According to the agreement, Esmark will sell its 35.7% interest for $71.4 million to Nisshin Holding, Inc., which currently owns the remaining 64.3% equity interest position. Esmark plans to use net proceeds from the sale to reduce long-term debt.
"As detailed in my November 6, 2007 letter to our shareholders, today's actions represent one of the first phases of our plan to make Esmark profitable,” stated James Bouchard, Esmark’s Chairman and CEO. “The minority interest in Wheeling-Nisshin was not strategic to our core businesses, and the reduction of debt will improve our ability to operate the company and achieve our cost-reduction goals.
“As we have committed,” continued Bouchard, “we will continue to evaluate all of our operations and take actions to discontinue non-competitive product offerings and equipment, improve our operations, as well as evaluate and pursue when appropriate strategic options, all in an effort to enhance our company and position it for sustained, long-term growth."
Bouchard added, "Improvements made in 2007 to our EAF to enhance its hot-charging ability and to accept higher residual scrap have also resulted in immediate cost savings to the company in 2008. I am also pleased to report that we expect EBITDA for our Mill Operations—before any opening balance-sheet adjustments—to be positive in December, the company's first full month of operation post-merger. EBITDA is also anticipated to be positive in the first quarter of 2008 for both of our operating segments. This is a strong indication that the operational changes we have already implemented are favorably impacting the bottom line.
“Our financial, strategic, and operational partners have helped greatly,” said Bouchard. “Our plan is underway and working."
The sale of Esmark’s minority equity interest in Wheeling-Nisshin is expected to close in March 2008.
Esmark Inc. is a vertically integrated steel producer and distributor, combining steel production capabilities through both blast furnace and electric arc furnace technologies with the just-in-time delivery of value-added steel products to a broad customer base concentrated in the Ohio Valley and Midwest regions. Currently headquartered in Wheeling, W.Va., the company produces carbon flat-rolled products for the construction, container, appliance, converter/processor, steel service center, automotive and other markets. Products include various sheet products such as hot rolled, cold rolled, hot dipped galvanized, electro-galvanized, black plate and electrolytic tinplate.
