Stelco selling subsidiaries to pay off deficit
Legally insolvent Canadian steelmaker Stelco Inc. is nearing a deal to sell three non-core subsidiaries to Mittal Steel Co. in order to raise new capital to help pay off its large bankruptcy deficit. Mittal is reportedly close to buying wire products manufacturers Stelwire Ltd. and Stelfil Ltée, as well as mini-mill Norambar Inc., for approximately Canadian $175 million. Stelco is selling its non-core assets in order to pay back its CA$1.3-billion pension deficit. Part of the money from the sale will go towards a CA$200 million initial down payment on the debt. The company has said these subsidiaries no longer fit into its long-term plans which are focused primarily on its core mills in Hamilton and Nanticoke, Ontario. Stelcos decision to concentrate on its Nanticoke mill could not come at a more crucial point. Union members at the mill recently announced they will strike if they are not given a new contract within 90 days. Mittal, the worlds largest steelmaker, produced 42 million tons of steel last year and operates in 14 countries. The company is also bidding to buy steel mills in Turkey and the Czech Republic.