U.S. Steel sets process rules for sale of Hamilton assets
17 March 2015
A plan to sell the former Stelco plants in Hamilton and Nanticoke is ready for court approval.
In a motion going to Superior Court on March 30, U.S. Steel Canada lays out a two-stage proposal intended to off-load the mills by the end of this year.
The ponderously titled Sale and Restructuring/Recapitalization Process (SARP) is designed, according to legal filings, "to solicit interest in and opportunities for a sale, restructuring or recapitalization of USSC's assets."
The SARP process outline will "optimize the chances of securing the best possible price for the assets for sale or the best possible investment in the continuing operations of USSC for the benefit of its stakeholders," the company said in its motion.
Homer Parkhill, a managing director at Rothschild Inc., USSC's financial adviser, said starting it now will give the company time "to run an effective process in the event a consensual restructuring solution does not materialize" and the company is forced into a court-ordered liquidation.
Potential bidders will receive a process summary or "teaser letter" by April 13. Those that sign a confidentiality agreement and are deemed "likely to be able to consummate a sale, restructuring or recapitalization" will then get detailed information to be used to craft a letter of interest by May 20.
Potential buyers moving to the next step will have to submit proposals that include the price they're offering for the mills and/or the land, what they intend to do with the assets (including what they'll do with employees and their pension funds and suppliers) and how the proposed purchase is to be financed.
On the block are 813 acres of prime, but heavily polluted, industrial land in Hamilton and 6,600 acres in Nanticoke in addition to coke ovens, steelmaking and finishing equipment and other operating assets in both places.
At any point in that process, USSC is permitted to bring a motion to court asking for a bid to be designated the "stalking horse" — one against which all others are measured.
In his affidavit, Parkhill said the entire process was designed to be flexible "to take into account the potential variety of (letters of interest) that may be received and the fact that in order to maximize value in this process, USSC may ultimately decide … to select certain combinations of bids that together represent the best overall value for stakeholders."
A separate process the company started in January to sell its Hamilton plant and land will continue as part of this broader one.
Originally, the outline of the sales process was to be completed in November, but that deadline was extended several times "to provide time for discussions relating to a global consensual restructuring solution to occur among stakeholders, and to allow the company to update its 2015 business plan.
In his affidavit, Parkhill said as of Feb. 27 USSC had $142.7 million in cash on hand and had not drawn against a $185-million line of credit provided by its parent company. The cash on hand is expected to give the company enough financial stability to move through the sales process.
In a separate motion, the company asks the court to approve a report setting its outstanding debts at $2.4 billion, the bulk of which is owed by USSC to its Pittsburgh-based American parent.
A hearing date on that motion has not been set.
Source : http://www.thespec.com/