Company did not disclose proposed purchase price, but said offer includes almost $1 billion in commitments to current and former steelworkers
HAMILTON, Ont.—Ontario Steel Investments Ltd.—a group of steel industry investors led by Essar Global Fund Ltd. shareholders—has announced a formal bid for U.S. Steel Canada (USSC).
The company did not disclose the proposed purchase price for USSC’s main assets in Hamilton and Nanticoke, Ont., but said the bid includes the assumption of $954 million of the steel producer’s pension responsibilities as well as a commitment to pay $25 million per year into the USSC’s pension fund for retired and active workers.
“We are very excited to put this bid forward for Stelco; it is another important step in advancing our vision of creating a true Canadian steel champion,” Ontario Steel said in a release. “Our Offer is the culmination of 18 months of discussions with all of the key stakeholders to find the best outcome for the business.”
The latest development in a decade-long string of controversies and legal battles, Ontario Steel said the offer was designed to provide maximum benefits to all stakeholders. Among a wide range of other issues, workers’ pensions and benefits have been a major flash point throughout the sale process.
Formerly known as Stelco, USSC officially put out the for sale sign this February. The company has been operating under creditor protection since 2014 following a controversial 2007 takeover by American producer U.S. Steel.
Part of a wider battle to maintain jobs and production in Ontario’s troubled steel industry, any deal for USSC would require an agreement with the United Steelworkers (USW) union. Ontario Steel said it remains in “active discussions” with USW and plans to continue talks with the province of Ontario to ensure the long-term interests of all stakeholders are protected.
As the sale process for the Hamilton and Nanticoke steelworks continues, Essar Steel Algoma’s facility in Sault Ste. Marie, Ont. is also searching for a buyer after entering a court-supervised restructuring late last year. Facing opposition from the USW, New York-based KPS Capital Partners LP recently shelved a bid for the insolvent producer.