Canadian Bankrupt Firm Be Vigorous With Help Of Russia

Russian steel giant Severstal yesterday made a formal takeover bid for Canadian steel-casting firm Stelco Inc, which is in the midst of bankruptcy protection.

Russian company is likely to undertake or refinance all of Stelco?s long-term debt. Severstal will also satisfy Stelco's unsecured bond and trade creditors with cash payments.

The buyer is also offering $400 million in capital spending on Stelco's foundries. Severstal says it will "work with the company and labor to address the company's benefit and pensionissues."

Severstal has the expertise in restructuring that includes the purchase of a bankrupt Michigan steel plant last year, according to Severstal's North American operations head, Vadim Makhov.

He said if Severstal gains control, "Stelco will be a vigorous company, continuing to serve its clients reliably and efficiently, contributing to the community and providing new opportunities for all employees."

Stelco sought creditor protection last year and has been working on restructuring plans that included the option of selling the whole company, or some of its divisions, and re-financing its balance sheet, which includes 1.25 billion Canadian dollars (about1 billion US dollars) in pension shortfalls and other employee benefits.