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Severstal Completes Acquisition of WCI Steel
07/08/2008 - OAO Severstal completes its acquisition of WCI Steel for a total cash consideration of US$140 million.
OAO Severstal has completed its acquisition of WCI Steel for a total cash consideration of US$140 million. The Warren, Ohio, based facility will now be known as Severstal Warren, Inc.
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"Since 1912, steel has been made in Warren, providing good-paying jobs for hundreds of thousands of people during its nearly 100 years of operation.
“Over the years, the changes in ownership have propelled our people to reach higher and become stronger in their dedication to diverse and high-quality steel backed by outstanding custom service for our many valued and loyal customers. We expect that tradition will continue under the ownership of Severstal.
"Steelmaking in Warren has been acclaimed for its custom steel, custom service and creative solutions for nearly a century. It has been the lifeblood of this region and has sustained the community during good times and bad. Severstal, with its global operations and supply chain, will provide our facility with a bright future built on a proud past.
“Under Severstal ownership, the Warren operations, which will be known as Severstal Warren, Inc., are positioned for long-term success in today's increasingly global and highly competitive steel marketplace.
Leonard M. Anthony
Outgoing President and CEO of WCI Steel
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“Steel production in Warren has long contributed high-quality products to a region that is at the historical center of steelmaking in the US,” commented Gregory Mason, CEO of Severstal International and COO of OAO Severstal. “Severstal is ready to carry that tradition forward in a way that is consistent with our strategy for growth and investment in North America; a strategy that views the experience and talent of the people at WCI Steel as a key part of Severstal's continued success.”
In connection with the acquisition, WCI announced that it has called for redemption all of the US$100 million aggregate principal amount outstanding of its 8% Senior Secured Notes due 2016 (CUSIP No. 92927H AA 7). These Notes will be redeemed on August 6, 2008.
Citi and Raymond James acted as financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal counsel to Severstal.
Moelis & Co. acted as exclusive financial advisor to WCI Steel, Inc. McDermott Will & Emery LLP acted as legal counsel to the company, and Kaye Scholer LLP acted as legal counsel to the Special Committee of the Board of Directors.
OAO Severstal, an international metals and mining company, focuses on high value added and unique niche products and has a successful track record of acquiring and integrating high-quality assets in North America and Europe. Severstal owns mining assets in Russia, thus securing its supplies of raw materials. In 2007, Severstal produced 17.5 million tons of steel. Revenues were $15.2 billion, EBITDA was $3.7 billion, and EPS was $1.92.
Severstal International is an operating division of OAO Severstal comprising North American and European segments.
WCI Steel, an integrated producer of value-added, custom steel products, serves niche markets emphasizing customer and technical service. WCI Steel currently produces 185 grades of flat-rolled custom and commodity steel products at its Warren, Ohio facility. The company focuses on a wide range of custom flat-rolled steel products, including high carbon, alloy, ultra high strength, and heavy-gauge galvanized steel and on developing closer, more responsive relationships with customers. Major customers are steel converters, processors, service centers, construction product companies, and pipe and tube manufacturers.
