NA report8 Sep 2022 18:53
TORONTO/LONDON, Sep 8 (Reuters) - United States Steel Corp
and Nucor Corporation are likely bidders for the
North American unit of Russian steel producer Evraz Plc
, though Canada's sanctions against Russia complicate
the process, according to steel sector industry executives and
investment bankers.
London-listed Evraz put its North American assets on sale in
August after Britain sanctioned it in response to Russia's
invasion of Ukraine .
The sale, run by New York-based boutique advisory firm Three
Keys Capital, would have to navigate Canada's sanctions against
Russian billionaire Roman Abramovich, who owns 28% of Evraz,
according to the sources.
Russia calls its actions in Ukraine "a special military
operation."
USSC and Evraz declined to comment and Nucor did not respond
to an email query.
An official from Three Keys declined to comment due to
confidentiality obligations.
The North American unit of Evraz is one of the company's
biggest manufacturing plants, spanning six cities in the United
States and Canada. The largest part of the business is in
Canada, employing 2,000 people and generating $2.4 billion in
revenues in 2021.
"The crown jewel of this business is in Canada," said a
former employee of Evraz, who declined to be named. Canada's
sanctions mean the assets could be split in three parts and sold
separately since Abramovich is not sanctioned by the United
States, the former employee added.
The sanctions against Abramovich gives the Canadian
government powers to forfeit, seize and sell assets owned by
sanctioned individuals. Canada said it was aware of Evraz's
potential sale and was monitoring the situation.
"We will continue to suffocate the Russian regime, while
protecting Canadian workers from the consequences of (Vladimir)
Putin's war," said Marilyne Guevremont, spokesperson for Global
Affairs Canada.
Trade sanctions introduced by the West against the top
producer of steel have squeezed global markets, leaving
consumers to scramble for supplies.
Any person involved in the transaction, including lawyers
and bankers, will need a special permit from the Canadian
government, according to the terms of the sanctions.
But the subsidiary could be offloaded at a discount to its
actual valuation as the sale involves assets of a sanctioned
individual, bankers said.
Some lawyers said it is possible Canada would want to make
an exception as it did with the Russian-German Nord Stream
pipeline, when Ottawa returned a turbine for the gas pipeline to
Germany following repair work.
In the case of Evraz, it is possible the Canadian government
would want to see the asset out of the control of Abramovich so
the company's business in Canada is not hindered by sanctions
concerns, said Matthew Kronby, a partner with Canadian law firm
BLG.
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