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The former parent company of Essar Steel Algoma Inc. is teaming up with agriculture and industrial giant Cargill Inc. to renew its bid to buy U.S. Steel Canada Inc., sources familiar with the companies’ plans say.
Essar Global, which made a public bid for U.S. Steel Canada in August, is trying to jump ahead of Bedrock Industries LP, which has been anointed by the Ontario government as the favoured bidder to take the troubled steel company out of protection under the Companies’ Creditors Arrangement Act.
The August bid for U.S. Steel Canada, formerly known as Stelco Inc., was rejected by the company and the court-appointed monitor overseeing the restructuring. Sources familiar with the new bid say it is also unlikely to succeed, as Bedrock is offering better terms and deep-pocketed Cargill’s participation is limited to a loan.
“Our understanding is Cargill is involved as a lender, not a partner,” said one investment banker involved in this complex restructuring for U.S. Steel Canada. “Cargill has made a loan against a foreign steel or coal asset owned by Essar Global.”
Cargill’s energy and industrial unit has a global metals business that operates nine steel service centres in the United States and China that process and finish steel for end users. The Minneapolis-based parent is one of the largest private companies in the world, with 150,000 employees and annual sales of $107-billion (U.S.).
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