Severstal could pay $1 bln in special dividends from sale of U.S. assets
MOSCOW. July 30 (Interfax) - Russian steelmaker OJSC Severstal could pay special dividends of $1 billion of the $2.3 billion it received from the sale of its North American factories Severstal Dearborn LLC and Severstal Columbus LLC, the company said.
Severstal will make a final decision on the issue following the deal's completion.
The company also intends to implement changes to the current dividend policy as concerns quarterly dividend payments, which could grow to at least 50% of net profit to International Financial Reporting Standards (IFRS) from the current 25%. The company will be prepared to pay out such dividends if the net debt to earnings before taxes, depreciation, and amortization (EBITDA) ratio is below 1.
If this ratio exceeds 1, Severstal will return to its current dividend policy of no less than 25% of IFRS net profit until the ratio falls below 1.
The board of directors of Severstal has approved the sale of 100% of the company's U.S. plants Severstal Columbus and Severstal Dearborn, the Russian steelmaker reported on July 21.
Severstal Columbus is being bought by Steel Dynamics and Severstal Dearborn will be sold to AK Steel Corporation.
The subsidiaries are being sold for a total cash consideration of $2.325 billion, Severstal said. "Completion of the sale is subject to customary closing conditions, including expiration of the Hart Scott Rodino Antitrust Improvements Act waiting period. The closing of the transaction is not subject to any financing conditions and is expected to be realized by year-end 2014," the company said.
Work to prepare and sign the agreements to sell the assets was begun at the end of 2013.
"The sale of Columbus and Dearborn unlocks substantial value to Severstal's shareholders," Severstal CEO Alexei Mordashov was quoted as saying in the press release.
Severstal's financial advisors on these deals were Evercore and Citigroup, and the legal advisor was Skadden, Arps, Slate, Meagher & Flom LLP.
The previous week it was reported that Severstal is selling another one of its North American assets. The company signed a binding agreement with Canada's Corsa Coal Corp. on the sale of PBS Coals Inc. (Pennsylvania, U.S.), a producer of coking coal. This $140 million deal will be closed by mid-August.
Mordashov said earlier that if the company sells its North American assets it might use the proceeds to pay down debt. Severstal's total debt stood at $4.444 billion as of March 31, 2014.
Dearborn and Columbus constitute Severstal's North American division. Dearborn was acquired in 2004 as part of the takeover of Rouge Industries. Severstal modernized the plant at a cost of $1.4 billion. The Columbus plant was also acquired in 2004 and launched production of steel from scrap in 2007.
Severstal is a vertically integrated steel company with assets in Russia, North America, Europe, Africa and Ukraine. The company's principal shareholder is Alexei Mordashov, who owns 79.2%. The remaining shares are in free float.