The Renco Group, Inc. Announces Landmark Purchase Agreement of Three Steel Companies From Severstal North America

Estimated Transaction Value of $1.2 Billion

Mar 02, 2011, 08:00 ET from The Renco Group, Inc.

NEW YORK, March 2, 2011 /PRNewswire/ -- The Renco Group, Inc. announced today that its newly formed, wholly-owned subsidiary, RG Steel, LLC, has signed a stock purchase agreement to acquire three steel companies currently owned by Russian-based OAO Severstal through its U.S. subsidiary, Severstal US Holdings, LLC. The transaction, estimated at $1.2 billion, will make RG Steel the fourth-largest flat rolled steel producer in the United States.

The agreement calls for RG Steel to purchase all of the stock of 1) Severstal Sparrows Point LLC based in Baltimore, Maryland 2) Severstal Warren LLC, based in Warren, Ohio and 3) Severstal Wheeling Inc. and Wheeling Corrugating Company, both based in Wheeling, West Virginia. Additionally, RG Steel will acquire a 50 percent ownership interest in 1) Mountain State Carbon LLC, a cokemaking facility in Follansbee, West Virginia, and 2) Ohio Coatings Company, based in Yorkville, Ohio.  RG Steel will receive one half of the coke output from Mountain State Carbon and will continue its long-standing relationship with Ohio Coatings Company.  The purchase of these assets will provide RG Steel with approximately 7.5 million tons of annualized steelmaking capacity.  

Ari Rennert, President of The Renco Group, Inc., commented on today's announcement: "The formation of RG Steel will create a dynamic, service-oriented company with strategically located facilities led by newly appointed President and Chief Executive Officer, John Goodwin, and a team of seasoned steel industry veterans."

Mr. Goodwin joins RG Steel with more than four decades of high-level steel industry leadership experience, including senior executive positions with U.S. Steel, National Steel, Beta Steel and Wheeling Pittsburgh Steel and is widely regarded as one of the industry's leaders in steel operations and commercial strategies.  Mr. Goodwin stated. "We are looking forward to working with existing and future customers to establish the RG Steel brand as one synonymous with excellence in quality and service in the steel industry."

The Renco Group, Inc. is also pleased to announce that RG Steel has executed a new collective bargaining agreement with The United Steelworkers (USW), subject to ratification by its members.  RG Steel will ensure a seamless transfer of ownership to avoid any potential impact to all key stakeholders including customers, suppliers and employees.  All pending orders will be completed and fulfilled without any disruption or delay of service, as the USW is supportive of a smooth transition between the owners.

RG Steel will be headquartered at Sparrows Point, Maryland.  Completion of the sale is expected in March 2011, pending regulatory approval.

For this transaction, The Renco Group, Inc. engaged Cadwalader Wickersham & Taft for legal counsel, and retained UBS and Metal Strategies, Inc. as financial advisors.

Contact:  Andrew Shea, The Renco Group (240.482.3739); Bette Kovach, Sparrows Point (410.388.6005)

About the Renco Group:

The Renco Group, Inc. is a private, family-owned investment holding company founded in 1975 by Ira L. Rennert. Based in New York, the company has established a reputation as a global leader within a diverse range of businesses including mining and mineral recovery, defense equipment, fabrication of metal products and automotive supply. With more than $5 billion in portfolio company revenues and 15,000 portfolio employees world-wide, The Renco Group, Inc. provides its affiliates with the long-term stability and support necessary for its management teams to maximize the inherent value of their companies.

About OAO Severstal:

OAO Severstal is an international steel and mining company with a listing on the Russian Trading System, Moscow Interbank Currency Exchange and the London Stock Exchange. The company focuses on high value added and unique niche products and operates high quality assets in Russia, North America and Europe.

SOURCE The Renco Group, Inc.