NEW YORK A major East Coast scrap recycling company and exporter, OneSteel Recycling Inc., has been put up for sale by its parent company, Arrium Ltd.
The Sydney, Australia-based steel and iron ore producer said in a pre-earnings statement released July 4 that it would offer its U.S. recycling business for sale. Arrium also will look to sell its merchandising businesses that were previously part of its steel distribution segment, as well as its Australian tube mills business.
An Arrium spokesman said that only OneSteel Recyclings U.S. operations were for sale, and not the global entity that operates from 39 locations in the United States, Australia, China, India, New Zealand and the United Kingdom.
In the United States, OneSteel owns and operates five facilities in Florida, five in Maine and one in Virginia. It is unclear if the companys facilities in Canada will be included in the sale.
"It is the U.S. recycling operation that we are holding separately for sale. We are progressing this process and will provide an update at the time of our August results," the spokesman told AMM.
The company expects all the sales to result in impairment and restructuring charges of nearly Australian $360 million ($326.3 million).
"We have a priority to reduce the companys overall level of debt. Todays announcement reflects initiatives in our steel and recycling businesses, with our focus on improving earnings and cash generation," Arrium managing director and chief executive officer Andrew Roberts said.
The company had announced in June that it would focus on cash generation through improved earnings from cost reductions and driving down working capital, as well as divesting "non-integrated" steel businesses and properties. The company also combined its steel manufacturing and distribution businesses into a single steel business.
Arrium said it also is undertaking additional rationalization work, predominantly in its recycling business, resulting in impairment and restructuring charges of around A$50 million ($45.3 million), including about A$30 million ($27.2 million) of recycling goodwill.
Market participants in the United States said the news came as no surprise, with several companies rumored to be interested in acquiring OneSteels U.S. assets, although none would confirm the rumors.
"Theres been talk of OneSteel USA being up for sale for some time now. I think thats why Tommy Quirke and Steve Ryan left the company in May. They probably knew what was coming," one source said.
In May, the company confirmed that Quirke had resigned as president of OneSteel Recycling effective May 14 (amm.com, May 14). Ryan, a senior executive in the company, reportedly also resigned on the same day. The two are rumored to be mulling launching their own enterprise.
According to a second source, the valuation of OneSteel Recyclings U.S. operation will be poor. "With the Florida market so saturated with shredders and the new shredder that (Topsham, Maine-based) Grimmel (Industries LLC) has installed, I wouldnt say it is worth a lot. The land and the berth are worth something, though," he said.