2017 Financial Services Provider of the Year Finalists
BMO Harris Bank N.A.
BMO Harris Bank, a long-time and significant provider of capital to steel mills, metal service centers, scrap metal recyclers and other specialty metal operations, can provide clients Senior Credit Facilities ranging from $10 million to $1 billion.
The firm has consulted with numerous metals prospects or companies to arrange and provide additional availability and liquidity under Working Capital/Revolver agreements (to finance accounts receivable and inventory), a Letter of Credit Facility (to finance inventory on the water and material being manufactured at a foreign mill), or a Term Loan/Capital Expenditures Facility (to finance real estate and capital expenditures).
While a number of banks and financial institutions have abandoned the metals sector due to the historical volatility of metals commodity prices, BMO Harris has gained considerable market share in the metals-related segment and is aggressively pursuing opportunities there at the expense of other firms.
BMO Harris Bank and BMO Capital Markets values the metals and steel industry and determined early on that a specific metals group would have to be established within the Commercial Bank and Investment Bank in order to provide personal and direct service, and to build the expertise needed within the teams, the company said.
To meet those demands, BMO Harris created and maintains an ABL Metals Group, a Cash Flow Metals Group, and a Metals Investment Bank covering larger companies and housed within BMO Capital Markets. BMO Harris and its working metals group has continued to provide Senior Credit Facilities to steel companies for various reasons ranging from supporting acquisitions, leveraged buyouts, recapitalizations and turnarounds, to financing inventory on the water or at the foreign port, as well as for seasonal or growth working-capital needs.
Crunch Risk LLC
Crunch Risk LLCs participation in the launch of steel and metals futures contracts based on viable price benchmarks, such as those published in AMM and Metal Bulletin, has benefitted consumers and producers who need to manage their price risk in ferrous and base metals.
Andre Marshall began engaging the steel industry for futures as financial swaps when working for Koch Metals from 2001 through 2007, two of those years as an agent under his own Company Crunch Risk, LLC. Since the advent of the futures exchange contracts, Crunch Risk has been the main conveyor of liquidity in the ferrous space.
Among other contracts, Crunch Risk has helped develop the AMM Busheling MW Index Futures contract and the Metal Bulletin Aluminum European Duty Unpaid and European Duty Paid contracts. Crunch Risk is also the primary steel futures broker as well as the main broker in other aluminum premiums globally.
Crunch Risks latest efforts involve the Metal Bulletin Alumina Futures contract, which has provided a way and seen participants move to the publications benchmark pricing and away from LME Aluminum discount pricing. Crunch Risk is very excited about the further development of futures products to help the steel, ferrous and aluminum distribution markets.
With global coverage through 18 offices and seven strategic alliances, Evercore has established a reputation for its market-leading combination of metals sector advisory and debt-restructuring expertise.
The global, independent investment banking firm, now in its 21st year, provides strategic financial advisory services to clients in the steel industry and other prominent multinational corporations on mergers. Evercores 640 advisory bankers have advised on more that $2 trillion of announced transactions and have $12 billion in funds under management.
In 2016, Evercore acted as exclusive financial advisor to ArcelorMittal on the sale of its U.S. Long Carbon facilities. The transaction was part of ArcelorMittals strategic focus on the divestment of non-core assets and was completed on time despite challenging steel market conditions.
The company also acted as exclusive financial advisor to Excalibur Steel on its proposed employee- and management-led buyout of Tata Steels assets in the United Kingdom. Evercore assisted in negotiations with stakeholders, including Tata Steel, government entities and select regulatory bodies.
Evercore is currently acting as exclusive financial advisor to Canada-based Essar Steel Algoma in conjunction with the steelmakers ongoing $1-billion-plus debt restructuring. The company successfully prepared and helped Algoma file for creditor protection within an aggressive time frame and successfully helped secure $200 million in debtor in possession financing via an extremely competitive process.
Evercore is currently evaluating a potential sale/restructuring of Algoma and identifying, contacting and negotiating with interested parties and/or potential acquirers.
The London Metal Exchange
The futures contracts for steel scrap and steel rebar launched by the London metal Exchange (LME) 15 months ago settle to globally relevant index prices and provide an effective risk management tool for companies that do business in each step of the steel value chain: from demolition operations and recyclers, to mills, service centers and construction firms.
The LME has introduced a formal market maker program requiring a number of traders to post bids and offers daily on its electronic trading platform. This innovation has ensured that tradable prices for these contracts have been displayed since launch and, for the first time ever, the global steel industry has a 12-month tradable forward curve for both products. 2016 marked the first full year of trading and it closed with 490,990 tonnes traded for scrap and 87,370 tonnes traded for rebar.Growth is proving to be rapid and exponential with the volumes traded in January 2017 equating to more than half of 2016s total volume across both contracts 262,450 tonnes and 57,610 tonnes respectively for scrap and rebar, the LME said.