Ontario Steel in bid for U.S. Steel Canada, including C$1 billion liabilities

Tue Aug 9, 2016 11:48am EDT
 
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By Matt Scuffham

TORONTO (Reuters) - Ontario Steel Investment Ltd, a group that includes shareholders of Essar Global, said on Tuesday it has submitted an offer to purchase U.S. Steel Canada, which has been in creditor protection since 2014.

The offer includes the assumption of C$954 million ($725 million) in liabilities under U.S. Steel Canada's pension plan and a commitment to provide C$25 million toward post-employment benefits for U.S. Steel Canada's past and present staff.

U.S. Steel Canada, which employs nearly 2,000 workers in Ontario and has the capability to produce 2.6 million tons of steel annually, is a former unit of United States Steel Corp (X.N: Quote).

The United Steelworkers (USW) union had criticized U.S. Steel for its decision to eliminate Essar Global, an Indian energy and resources conglomerate, as a potential buyer of U.S. Steel Canada's operations in Hamilton and Nanticoke, Ontario.

Ontario Steel said it remained in active discussions with the USW regarding its offer and looked forward to continuing discussions with the province of Ontario.

"Our offer is the culmination of 18 months of discussions with all of the key stakeholders to find the best outcome for the business," it said.

In a separate deal, Ontario Steel announced in July that it had agreed with the union to negotiate the framework of a $900 million purchase of Essar Steel Algoma. Algoma, bought nearly a decade ago by Essar Global, was put up for sale while operating under creditor protection.

The union's support is required for the bids to be successful.   Continued...