U.S. Steel Canada Said to Draw Interest From ERP, Other Suitors

20 February 2016

U.S. Steel Canada Inc., the former unit of U.S. Steel Corp. under creditor protection since 2014, has drawn interest from ERP Compliant Fuels and Essar Steel Algoma Inc., people with knowledge of the matter said.

ERP Compliant has submitted a bid for the steel operations in Hamilton and Nanticoke, Ontario, and Essar Steel and several others are expected to submit offers by the Feb. 29 deadline, said the people, who asked not to be identified because the information is private. The assets are valued at about $1.5 billion, including debt, the people said.

“The sales and investment solicitation process continues under the supervision of the court and it would not be appropriate for U.S. Steel Canada to comment outside of the process,” said Joel Shaffer, a spokesman for the company.

A representative for ERP didn’t immediately respond to a request for comment. Brenda Stenta, a spokeswoman for Essar Steel Algoma, declined to comment.

ERP Compliant is run by Tom Clarke, a Virginia hospital executive and climate change activist. In addition to bidding on U.S. Steel Canada’s operations, Clarke has been scooping up mines from bankrupt coal producers Patriot Coal Corp. and Walter Energy Inc., betting he can help revive the struggling Appalachian region by selling coal bundled with carbon credits accrued by planting trees -- something he thinks will appeal to utilities struggling to meet new environmental standards.

In October, U.S. Steel Corp., the second-biggest steelmaker in the U.S., said a Canadian court approved an agreement to separate the operations of the Pittsburgh-based company from its Canadian unit.

Under the pact, the U.S. parent corporation agreed not to bid for the Canadian company if it came up for sale in the restructuring process. It said it would withdraw technical and engineering services over the next 24 months. The accord was approved by the Ontario Superior Court of Justice.

U.S. Steel Canada operates two principle facilities: Lake Erie Works in Nanticoke and Hamilton Works.

Lake Erie Works is an integrated steel mill with annual capacity of 2.7 million tons of raw steel production, and is the better of the two assets, according to the people familiar with the matter.

The older Hamilton Works’ steelmaking operations were permanently shut down in 2013 after being idled since 2010, according to bankruptcy court documents. Its operations now consist of coke ovens and capacity to finish and galvanize steel.


Source : bloomberg.com