U.S. Steel Canada receives, rejects offer from Essar Global consortium

By Caroline Salls

Pittsburgh, Aug. 10 – U.S. Steel Canada Inc. received an unsolicited offer for the company by Ontario Steel Investments Ltd., a consortium led by Essar Global Fund Ltd., but U.S. Steel Canada is not considering proposals from Essar at this time, according to a news release.

U.S. Steel Canada said Essar was eliminated from its sale and investment process (SISP) earlier this summer following the receipt of a proposal and detailed discussions between Essar, the company and other stakeholders, including the Province of Ontario.

The company said the unions and representatives for both active and retired employees and Essar were made aware of the reasons for Essar’s elimination from the process at that time.

U.S. Steel Canada said Essar was eliminated from the SISP as a result of its failure to provide satisfactory evidence of its financial ability to own and operate the company. In addition, the company said other affiliated entities of Essar continue to experience difficulties.

Essar’s elimination from the SISP also stemmed from its inability to gain the support of all stakeholders, as Essar requested relief and accommodations from the Province of Ontario. The province conveyed to U. S. Steel Canada and Essar that it was not prepared to accommodate the requests or to participate in further negotiations with Essar.

U.S. Steel Canada said the unsolicited offer includes terms that are substantially similar to what was previously rejected by the company and the province.

According to a release from Ontario Steel Investments, its purchase offer includes the assumption of U.S. Steel Canada’s pension plan in totality and a commitment to provide substantial post-employment benefits (OPEBs) to active and retired employees.

Specifically, Ontario Steel said the offer includes the assumption at closing of C$954 million of employer liabilities under U.S. Steel Canada’s defined benefit registered pension plans and a commitment to contribute C$25 million per year toward OPEBs.

The total proposed purchase price was not disclosed.

“Our offer is the culmination of 18 months of discussions with all of the key stakeholders to find the best outcome for the business,” Ontario Steel said in its release. “It will provide maximum benefit to all involved.”

Hamilton, Ont.-based U.S. Steel Canada’s operations are located at Lake Erie Works, a fully integrated steelmaking facility, and at Hamilton Works, a cokemaking and finishing facility.

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