HAMILTON, ON, Aug. 10, 2016 /PRNewswire/ - U. S. Steel Canada Inc. ("U. S. Steel Canada" or "the Company") became aware yesterday of an unsolicited, purported offer for U. S. Steel Canada by Ontario Steel Investments Limited, a consortium led by Essar Global Fund Limited ("Essar").
Earlier this summer, Essar was eliminated from the Company's Sale and Investment Solicitation Process ("SISP"), following the receipt of a proposal and detailed discussions between Essar, the Company and other stakeholders, including the Province of Ontario. The Unions and representatives for both active and retired employees and Essar were made aware of the reasons for Essar's elimination from the process at that time. The Company is not considering any further proposals from Essar.
Among other reasons, Essar was eliminated from the SISP due to its:
- Failure to provide satisfactory evidence of its financial ability to own and operate the Company – As part of the SISP, Essar was asked to provide evidence of its ability to meet financial obligations associated with its bid and failed to satisfy the Company and the Monitor of its ability to do so. In addition, among other things, other affiliated entities of Essar continue to experience difficulties. On March 31, 2016, the second largest credit rating agency in India, gave Essar Steel India Ltd. a rating assigned to instruments in default or expected to be in default soon. Essar's Canadian steel asset, Essar Steel Algoma, is currently under a court-supervised restructuring and Essar was eliminated from the sales process in that restructuring. Essar Steel Minnesota failed to satisfy certain requirements of the State of Minnesota and filed for Chapter 11 bankruptcy protection on July 8, 2016.
- Inability to gain the support of all stakeholders – Essar requested certain relief and accommodations from the Province of Ontario. The Province conveyed to U. S. Steel Canada and Essar that it was not prepared to accommodate Essar's requests or to participate in further negotiations with Essar.
Yesterday's communication from Essar's consortium includes terms that are substantially similar to what was previously rejected by the Company and the Province. U. S. Steel Canada will avoid any distraction that could be detrimental to the Company, its employees and pensioners, at a time when the restructuring process is progressing, and negotiations with the current bidders continue. U.S. Steel Canada will provide further updates as developments warrant.
About U. S. Steel Canada, Inc.
U. S. Steel Canada's operations are located at Lake Erie Works, a fully integrated steelmaking facility and at Hamilton Works, home to cokemaking and finishing operations including our premier zinc-coating facility, the world-class Z-Line. U. S. Steel Canada has the capability of producing approximately 2.6 million tons of steel annually and employs approximately 2,200 people.
SOURCE U.S. Steel Canada