NLMK-Duferco JV has reached a definitive agreement with Winner Steel INC. and its controlling shareholder to acquire substantially all the assets of Winner Steel INC. and certain of its liabilities.
The acquisition will be effected through Duferco U.S. Investment Corporation, a wholly-owned subsidiary of Steel Invest & Finance S.A. (Luxembourg), a 50/50 joint venture between the Duferco Group and NLMK. The acquired assets and liabilities will be held by Duferco U.S. Investment Corporation through a newly created entity, Winner Steel LLC.
The total acquisition price, including the assumed liabilities, is estimated to be approximately USD211.6 million, subject to a working capital adjustment based on the closing balance sheet.
NLMK-Duferco JV is now discussing with Esmark the possibility of granting Esmark or its affiliates a 6-months option to acquire up to 50% Winner Steel LLC at NLMK-Duferco JV cost plus agreed interest.
Winner Steel is one of the largest independent galvanized steel producers in the United States. Its operations are located on a single site in Pennsylvania and include three galvanizing lines with combined annual capacity of around 1.2 million tonnes and production in 2006 of around 0.6 million tonnes. Winner Steel’s revenues in 2006 were around USD427 million.
The acquisition of Winner Steel will result in further downstream expansion for the NLMK-Duferco JV Farrell facility, which, being located next to Winner Steel, has historically been one of its major suppliers of cold-rolled substrate. The transaction is expected to result in substantial synergies for the Farrell facility and is viewed by NLMK-Duferco JV as a good alternative to the construction of a galvanizing line at the Farrell site.
The closing of the transaction is expected in June, 2007.
About Novolipetsk Steel (NLMK)
Novolipetsk Steel (NLMK) is one of the world’s leading steel companies and one of the three largest flat steel producers in Russia, producing over 9 million tonnes of crude steel annually. NLMK’s production facilities are among the most technologically advanced in Russia, producing flat steel products in a variety of grades and sizes. NLMK is one of the world’s most profitable steel companies with EBITDA margin over 40%.
The traditional strengths of the Company are: vertical integration into raw materials, world class assets with a competitive cost of production, proximity to mature and developing markets where the company has strong positions, sound financial performance, professional and experienced management team.
For further information visit www.nlmksteel.com
About Duferco Group
Duferco Group is an international steel production, processing and trading group with headquarters in Lugano, Switzerland. Duferco had revenues in excess of USD 7 billion in 2005, and is one of the world’s largest companies engaged in the worldwide production, distribution and trade of all types of steel products, including raw materials used in steel making processes. Duferco has trading and production activities in more then 40 countries. It operates steel making and processing plants in Western and Eastern Europe, USA, South Africa and Central America.
For further information visit www.duferco.com
About Steel Invest & Finance S.A
NLMK and Duferco Group formed a joint venture through Steel Invest & Finance S.A. (Luxembourg), a limited liability company (société anonyme) established under the laws of Luxembourg in which they each hold a 50% interest. The joint venture holds 100% or majority interests in 23 companies including one steel making plant and five steel rolling facilities with total finished steel output of 4.5 million tonnes in 2006 as well as a network of steel service centers.
About Esmark Inc.
Headquartered in Chicago, USA and founded by the Bouchard Group, Esmark is a steel services family of companies.
For further information visit www.esmark.com