Liberty House Group, a United Kingdom-based commodities trading group, wants to take a run at acquiring Essar Steel Algoma.
A July 17 article in the Financial Times said Liberty House is eyeing the Sault Ste. Marie steel producer and the assets of U.S. Steel Canada, formerly the Stelco steelworks in Hamilton and Nanticoke, according an anonymous source close to the situation.
Liberty House is headed by Sanjeev Gupta, a former Tata Steel executive.
Essar Steel Algoma continues to operate since entering creditor protection last fall.
The article said Liberty House was a bidder in the highly contentious sales and investor solicitation process held over the winter and was reportedly “monitoring” the situation in Minnesota where Essar Steel halted construction on its iron ore pellet plant after filing for bankruptcy protection.
That controversial complex was designed to supply Essar Steel Algoma with taconite pellets upon completion.
In recent years, Liberty has acquired and revived small steel mills and metal-based engineering companies in the U.K., and remains in pursuit of Tata Steel’s money-losing assets in Britain, which were put on the block last March.
Last week, New York-based KPS Capital Partners pulled out of the race as Essar Steel’s preferred choice to acquire the Sault plant and merge it with the Stelco assets. However, a group of lenders involved in the KPS proposal remain in the hunt.
According to the Financial Times article, the reason why KPS withdrew was because it failed to reach an agreement with the provincial government.
The transfer of ownership would have involved renegotiation of the collective agreement and pension plans, something the United Steelworkers wasn’t prepared to do.
In the meantime, Essar Global, Essar’s Steel parent company, is making a U.S.$900-million bid to “recapture” the Sault steel works it originally acquired in 2007 and wants the investor solicitation process reopened.
An Ontario Superior Court judge had earlier rejected Essar Global’s bid, but they have the firm backing of the Steelworkers, who hold a critical veto in any new ownership proposal.
Essar Global wants to combine the Sault and U.S. Steel assets into a new company, Ontario Steel Investments, but the Financial Times is reporting they have competition coming from Bedrock Industries, a New York private equity firm, which is interested in the southern Ontario steel mills.
