NEW YORK The fate of OAO Severstals North American steel mills was the elephant in the room during much of the Steel Success Strategies XXIX conference in New York this week.
Notable was the absence of any on-the-record discussion of what price the facilities might fetch. Executives carefully steered clear of the subject on stage, but rumorsoften conflictingswirled on the sidelines of the conference sponsored by AMM and World Steel Dynamics Inc.
Severstal NAs two assetsan integrated mill in Dearborn, Mich., and a mini-mill in Columbus, Miss.are expected to attract bids ranging from $2 billion to $3 billion, with most estimates falling in a tighter range of $2.5 billion to $2.8 billion. The bulk of the value is in the Columbus operation, with the Dearborn plant likely to be valued at somewhere south of $800 million.
Opinions differed on how long any sale might take, with some sources suggesting a deal could be announced within weeks while others insisted the process would take much longer.
Four bidders are thought to be in the running: a joint bid by Fort Wayne, Ind.-based Steel Dynamics Inc. (SDI) and West Chester, Ohio-based AK Steel Corp.; U.S Steel Corp.; Japans JFE Steel Corp.; and São Paulo-based Cia. Siderúrgica Nacional SA (CSN).
Questions surround all four bids. SDI is interested in Columbus and is said to have the easiest access of all the domestic bidders to the funds necessary for the purchase. AK Steels and U.S. Steels balance sheets are not in as great a shape, however, and conference scuttlebutt centered on how those two companies might finance their respective bids.
Some sources claimed that U.S. Steel had already proposed a plan to Severstal that included U.S. Steel shares, although this was rejected by the Russian company, the same sources said. Others said that U.S. Steel might consider swapping its U.S. Steel Koice SRO subsidiary as part of a deal for Severstal NA.
Overseas bidders CSN and JFE have often been connected with asset sales in the United States. CSNs interest is usually tied to its ownership of a mill in Terre Haute, Ind., that lacks primary steelmaking. Senior executives at the conference said that JFE might be looking for a "win" after Japanese rival Nippon Steel & Sumitomo Metal Corp. was part of a successful bid for ThyssenKrupps Calvert, Ala., asset.
Executives from Severstal and two of the rumored bidders sat on a panel together during the conference. Severstal NA chief executive officer Saikat Dey, SDI president and chief executive officer Mark D. Millett and AK Steel chairman, president and chief executive officer James L. Wainscott declined to comment during the panel discussion when an audience member asked whether Severstal NA was for sale and, if so, whether any of the panelists might be interested in acquiring it.