Severstal North America Sells Three U.S. Facilities to The Renco Group

Severstal North America, a subsidiary of OAO Severstal, based in Russia, has announced that RG Steel LLC, a newly formed subsidiary of The Renco Group Inc., a privately owned holding company, has signed an agreement to purchase Severstal’s operations in Warren, Ohio, Wheeling, W.V., and Sparrows Point, Md. The transaction is expected to close in March 2011, and is subject to customary closing conditions.

Upon closing of the deal, Renco Group says that RG Steel will be the fourth largest flat rolled steel producer in the United States.

As part of the acquisition, Severstal will receive $125 million in cash, a $100 million secured note and the repayment of $317 million of third-party debt at closing. Renco will assume various Severstal financial liabilities, including employee-related and environmental liabilities totaling $650 million.

“The sale of Warren, Wheeling, and Sparrows Point marks a strategic refocusing of our North American operations,” says Sergei Kuznetsov, CEO of Severstal International. “The sale of these assets will enable Severstal North America to evolve into a stronger and more focused organization that is better able to serve our North American customers,” Kuznetsov adds.

RG Steel also is acquiring a 50 percent ownership interest in Severstal’s Mountain State Carbon LLC cokemaking facility in Follansbee, W.V.; and Ohio Coating Co., Yorkville, Ohio.

To run the new steel subsidiary, The Renco Group has named John Goodwin president and CEO. According to a release, Goodwin has more than four decades of high-level steel industry leadership experience, including positions with U.S. Steel, National Steel, Beta Steel and Wheeling Pittsburgh Steel.