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New bidder for Essar Steel Algoma?

A UK-based global metals trader and integrated steel producer is reportedly pursuing deals for Essar Steel Algoma and the former Stelco mills in Hamilton and Nanticoke. It also has its eye on Essar Steel Minnesota.
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20160603 Essar Steel Algoma KA 03
FILE PHOTO: Essar Steel Algoma. Kenneth Armstrong/SooToday

There may be a new player in the bidding for Essar Steel Algoma, according to a report from the United Kingdom.

The Financial Times is reporting that Liberty House, a London-based metals trader and integrated steel producer, is pursuing deals for the Sault steelmaker and also the former Stelco mills in Hamilton and Nanticoke.

"Separately, it is 'monitoring' an iron-ore pellet plant under development by Essar in Minnesota that has filed for bankruptcy protection, with the view that it could supply the Canadian mills," the Financial Times' Michael Pooler reports.

Last week, the private equity firm KPS Capital Partners abandoned its bid to acquire Essar Steel Algoma after failing to reach agreement with United Steelworkers Local 2251.

Term lenders that were originally part of the KPS bid are now pursuing an independent offer.

Local 2251 wants the judge overseeing Essar Steel Algoma's insolvency protection to reconsider an offer from Essar Global, previously rejected because of perceived financial inadequecies.

Liberty House has acquired a number of smaller British steel mills in recent years, and attempted to acquire Tata Steel's operations there earlier this year.

It is pursuing what it calls a GreenSteel agenda that uses steel scrap and local energy sources like biomass conversions and tidal lagoon power.

Products include hot-rolled coil, structural hollow sections, specialist steel plates, spiral welded tube, rebar and long steel.

Liberty House has operations on five continents.

The company issued the following statement last week about Brexit, the UK's pending withdrawal from the European Union:

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Liberty stakeholder statement regarding Brexit

As a British Group with a substantial international footprint, Liberty’s operations span five continents and serve customers in almost every part of the world.

We have a clear understanding of our global market, which has been built over the last quarter of a century.

While we operate in a multi-currency, multi-product environment, our balance sheet has always been based on the U.S. dollar and we expect that its improved performance against the British pound will have a positive impact on the group’s financial results.

Our global strategy is focused on growth and as a part of it, our overseas business will continue to provide stability while we continue to expand our portfolio of interests across diverse, but interconnected, UK sectors, including energy, steel, engineering and industrially-focused financial services.

Regardless of the UK’s relationship with Europe, Liberty’s plans are unchanged.

The group remains positive about the prospects for its UK steel interests – based on a more competitive business model – and is committed to working with all stakeholders and interested parties to deliver a more profitable and sustainable future for the sector as a whole.

We believe firmly that effecting change is possible, and that it will have a beneficial impact on both cost and quality.

Our GreenSteel strategy focuses on producing steel in the UK using local materials and sustainable energy while at the same time continuing to create value and employment in the downstream engineering sector and the wider industry.

We welcome the stability that the early appointment of a new UK government will bring and are very encouraged by the statements of our incoming prime minister about the need for an energy policy that secures supply and reduces user costs, along with a ‘proper’ industrial strategy, as well as a better research and development policy to encourage investors.

All of these elements support Liberty’s plans for developing and growing industry in the UK and further afield, which, we repeat are unaffected by the Brexit vote.

We acknowledge that there will be some challenges in the short term as business and the financial markets adjust and work through the transition period.

During this time, our focus will remain on our customers as we continue to provide them with the quality and continuity they require from us.

We also expect that the present weakness of the pound will improve the performance of our businesses that target Eurozone markets, and that domestic demand for the imported products we provide will remain largely unchanged.

At the same time we will continue to grow our business both organically and through acquisitions, as we have recently demonstrated with our investment in Poland.

We remain optimistic about the future as our plans have never depended on a single relationship or location.

We are a group that serves the global economy and, as such, Liberty will continue to seek and explore any new opportunities across every continent, including all parts of Europe.

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