The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article by Reporter Mark McNeil published in the November
10, 2004 edition
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Nov. 10, 2004. 01:09 AM |
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Bidding
battle begins |
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A young Russian
entrepreneur par excellence and a venerable German bank are in the running |
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By
Mark McNeil |
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Who are these deep-pocketed bidders with big plans and big bucks for Stelco? So far at least four companies have put in proposals to refinance the Hamilton steelmaker -- a Russian steel company, a German bank, a Canadian investment dealer and a Canadian investor group. Of the four, Severstal has been the most public about its plans. It wants to turn Stelco into a subsidiary after it assumes or refinances the steelmaker's debt, pays cash to unsecured bond and trade creditors, contributes $400 million toward capital improvements and works with the company and unions to deal with the pension issues. Severstal is headed by a 39-year-old mega-rich Russian named Alexei Mordashov. He studied at the Leningrad Institute of Economics and Engineering in the 1980s and then landed an assistant manager job at Severstal, a giant but problem-plagued steelmaker in his hometown Cherepovets in northwest Russia. He impressed his bosses and rose through the ranks, becoming general director in 1996. As the company became privatized, Mordashov bought huge amounts of shares and leveraged his way to the top job. Once there, he virtually single-handedly modernized the company into one of Russia's best managed manufacturers. He made managers more accountable, improved productivity and cut one-third of the 53,000 employees. After six years as general director, Mordashov became chairman of the board in 2002. Under him, Severstal has made a number of acquisitions, including purchasing auto maker UAZ, coal and railway companies, port facilities and local television stations and newspapers. Mordashov has become one of the wealthiest individuals in Russia and, according to Forbes magazine, is the 136th richest person in the world. He has an estimated personal net worth of $3.5 billion. He currently owns about half the company that made nearly $600 million last year and acquired Rouge Industries Inc., the seventh-largest steel producer in the U.S. for $285 million. "In five to 10 years there will be four, five, six steel giants in the world at the most,'' Mordashov said recently. "And we want Severstal to be one of them.'' The second bidder, Deutsche Bank, a Stelco bondholder, is one of the world's biggest banks and has been expanding its North American holdings in recent years. Since being founded in 1870, the history of Deutsche Bank has been closely tied with the history of Germany. The bank has been through two world wars, a Soviet occupation and was chopped into 10 companies before being brought back together in 1957. It's a major international financial institution with 21 million clients in 74 countries. The third bidder, GMP Securities Ltd.'s predecessor, Griffiths McBurney & Partners, was founded in March 1995 as an investment dealer for corporate clients and institutional investors. Today, GMP Securities is wholly owned by GMP Capital Corp. The fourth bidder, Clearwater Capital Management Inc. (Clearwater Capital) and Equilibrium Capital Management Inc. (Equilibrium Capital) formed an investor group that has made a capital proposal to Stelco for up to $125 million in an equity-linked note to be distributed by way of an underwritten rights offering made available only to shareholders. Under the plan, debenture holders would receive payment of all accrued and unpaid interest and interest on interest for any interest arrears on Stelco's emergence from bankruptcy protection. mmcneil@thespec.com 905-526-4687 With Spectator wire services and company websites |