More Severstal painThis article is suggesting that Severstal is trying to unload steel assets they bought just last year (they paid 1.5 billion). Now this is OAO Severstal, not Severstal Resources which owns 53% of HRG. Makes you wonder what they are going to do next, seems like everybody has "debt repayment issues" these days. Hey I know, plunk down another say 30 million in working capital in HRG and get the LT debt rescheduled to reflect cash flows say over 5 years, then build up HRG, then sell it for 10 times what you paid....easy!
CJ
Severstal Confirms Local Plant Shutdown
By PAUL GIANNAMOREWHEELING -- OAO Severstal announced today from its Russian headquarters that the shutdown of Ohio Valley facilities resulting from the world economic slowdown is expanding to include all but its Follansbee coke plant.
Severstal said in its announcement that steelmaking and hot rolling operations at Severstal Wheeling, which includes units in Steubenville and Mingo Junction, will remain idled. In addition, the company said the cold rolling and coating operations will be "temporarily idled in the coming weeks" as adjustments continue to be made to balance production with orders.
Sources said the company has terminated 88 employees at the Wheeling headquarters who were on temporary layoff status, effective at the end of April. The company has not confirmed those cuts.
About 1,100 workers have been affected by the steelmaking and hot rolling shutdown and as many as 1,900 others will be impacted by the idling of the cold mills.
The company continues to maintain the furloughs are temporary because of the economy, but a WARN Act notice was filed today in Brooke County. The notices are required anytime a shutdown affects a business with 60 or more employees in a location.
Industry experts are surprised at the timing of Severstal's efforts, since the weak economy has led to decreased demand for steel products by auto makers and the construction industry.
The Baltimore Sun reported Severstal will be closing its blast furnace at the Sparrows Point, Md., plant in June.
The company closed its blast furnace at Mingo Junction, along with the steelmaking basic oxygen furnace for a planned outage for refurbishing in August. The furnaces have not been brought back on line. The company's electric arc steelmaking furnace also has been shut down at Mingo Junction, and the steel caster and rolling mill closed at the end of April. The company has been saying it would bring units back on line when the economy improves.
Two Financial Times sources claim Severstal has been in talks with steel companies from Brazil, as well as Nucor, ArcelorMittal and Essar. ArcelorMittal currently owns the former Weirton Steel plant, where it operates the tin mill and associated operations but closed the hot end of the mill in 2005. Essar of India was bidding for the mill last year when Severstal ended up successfully purchasing Wheeling-Pittsburgh's local mills as part of the purchase of Esmark.
Russian steelmaker OAO Severstal purchased the former Wheeling-Pittsburgh Steel from Esmark Inc. in August for $1.25 billion, marking the company's second ownership change in less than a year. Chicago-based Esmark had completed an 18-month acquisition of the company in November 2007.
The former Wheeling-Pittsburgh Steel Corp. has been through two bankruptcies and multiple ownership structures since 1985.