Severstal to use funds from sale of U.S. assets to pay debt
MOSCOW. June 3 (Interfax) - Russian steelmaker OJSC Severstal will use the proceeds from the sale of its North American assets to settle debt if the assets are sold.
"These are good assets, [and] we have invested a lot in them and developed them greatly. But if it is now possible to receive significant revenue by selling them, liquidating the company's debt, making the company more robust and raise average yield - this is a very interesting option for us, but everything will depend on the price," the general director and founder of Severstal, Alexei Mordashov, told journalists.
He said the group "has no reasons forcing [the company] to sell these assets, but on the other hand, if the opportunity exists and if a very high price is given, Severstal will gladly consider this proposition."
Mordashov said Severstal was currently considering several options for developing steel assets in the U.S. and selling assets is not the goal in and of itself. If the sales price does not suit the company, Severstal will develop these plants, he said. Severstal is seeing a "growing interest" from various entities and a trend of consolidation is seen for the American market.
As of March 31, 2014, the company's overall debt totaled $4.444 billion. Net debt at the end of the first quarter had fallen 4.5% compared with end-2013 to $3.552 billion. The net debt to earnings before taxes, depreciation, and amortization (EBITDA) ratio fell to 1.6 in the first three months of 2014, which is more than target (1.5). Cash and cash equivalents stood at $892 million, and unused funds that were part of open lines of credit total $1.336 billion, which is above the company's long-term financial debt ($709 million).
Severstal North America is one of the largest steelmaking companies in North America with steel mills in Dearborn, Michigan, and Columbus, Mississippi. The first enterprise was acquired in 2004 as part of the takeover of Rouge Industries. Severstal spent $1.4 billion in modernizing the plant. Another plant - Columbus - was also acquired in 2004, and steel production was launched in 2007.
