Stelco OKs $749M recapitalization plan

Nov 15, 2004 | 09:25 AM | Scott Robertson

Once considered the ugly duckling in the North American steel industry, Stelco Inc., Hamilton, Ontario, suddenly has become a lot more attractive to potential suitors, who now find themselves in a bidding war for Canada's largest steel producer.

Stelco on Sunday said its board of directors had unanimously approved a term sheet with Deutsche Bank Securities Inc. and Deutsche Bank AG, which represent Stelco's largest group of creditors.

The term sheet provides for a recapitalization of Stelco involving a financing of Canadian $900 million ($749 million), including an asset-based loan facility co-underwritten by Deutsche Bank AG and CIT Business Credit Canada, for which Deutsche Bank Securities will act as lead arranger, and a purchase commitment by Deutsche Bank Securities of Stelco's convertible notes and bridge notes.

Other bidders are lining up in the wake of the bid by Deutsche Bank. GMP Capital Corp., Toronto, and GE Capital Canada have teamed up to make a C$1-billion-plus ($832.2-million) offer for the steel producer, which has been operating under protection of the Companies' Creditors Arrangement Act (CCAA) since late January.....





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