Severstal North America Completes Rouge Steel Purchase
02/02/2004 -
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Severstal and United States Steel Corp. recently reached agreement in principle with respect to Severstal North America's acquisition of Rouge Steel's 50% ownership interest in Double Eagle Steel Coating Co. Double Eagle is the world's largest electrogalvanizing line that produces premium quality galvanized sheet steel for the automotive industry. Mr. Mordashov expressed his appreciation to the management of U. S. Steel for their cooperative position in resolving the Double Eagle issue. "We are looking forward to a mutually beneficial and effective partnership in the Double Eagle joint venture." |
Severstal North America Completes Rouge Steel Purchase
Feb. 2, 2004 — OAO Severstal and its U.S. based affiliate, Severstal North America, Inc., have completed the acquisition of substantially all the assets of Rouge Industries, Inc. and its primary operating subsidiary, Rouge Steel Co.
The Asset Purchase Agreement was subject to ratification of the tentative UAW-Severstal North America labor agreement that was reached in December. Rouge Steel's UAW-represented production and maintenance employees ratified the agreement on Thursday, January 29.
Rouge Steel, the fifth-largest integrated steel producer in the United States, is OAO Severstal’s first foreign acquisition. Alexey Mordashov, CEO of Severstal Group Holding, referred to the deal as an important milestone of the global consolidation of the steel industry. "We believe that the performance of the former Rouge Steel Co. operations can be substantially improved with reasonably limited investments," Mr. Mordashov said.
Severstal North America also has acquired Rouge's 48% interest in Spartan Steel Coating, a hot dip galvanizing joint venture with Worthington Industries, Inc.
| Visit steelnews.com's Rouge Steel page for more background on this company. |
Within a short time, the company's Russian and American colleagues intend to finalize a plan for the financial improvement of the former Rouge Steel assets. "We are interested in a stable and long running development of our American enterprise, as well as positioning Severstal North America as a reliable and competitive supplier of high quality steel sheets for the automotive industry."
Mr. Mordashov announced that Mr. Vadim Makhov, Severstal Group's Deputy General Director, has been appointed as Chairman of the Board and will manage Severstal North America, Inc.
Citigroup has acted as a financial advisor to OAO Severstal in connection with this transaction.
Rouge Industries Inc. and its subsidiaries, Rouge
Steel Co. and Q S Steel Inc., filed for Chapter
11 protection with the U. S. Bankruptcy Court on October 23, 2003. Concurrently,
Rouge Industries announced that it had signed a letter of intent with
OAO Severstal to sell substantially all of its principal steelmaking assets.
On November 24, Severstal was named as the stalking horse in the competitive
bid process for the assets of Rouge Industries. The U. S. Bankruptcy Court-sanctioned
auction was held on December 19, 2003 in New York
City and Severstal's bid of $285.5 million was determined to be the highest
and best offer. On December 22, 2003, the U. S. Bankruptcy Court confirmed
the results of the auction.
