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Bidders line up for distressed Evraz

Prospective bidders for Evraz Highveld Steel and Vanadium stumped up $10m in guarantees by deadline yesterday, but the business rescue practitioners were unable to provide details on the preferred candidates for SA's second-largest steelmaker.
Bidders line up for distressed Evraz

Evraz Highveld, the South African subsidiary of the Russian-backed Evraz steel group, last week temporarily shut operations when it ran out of operating funds.

"We have received several guarantees already - and cash in escrow - and are in the process of verifying these," business rescue practitioner Piers Marsden of Matuson & Associates said. "Several bidders have met the requirement and are proceeding with the due diligence" he said.

The business rescue practitioners had earlier said they had received a number of indicative offers from "mini consortiums", including empowerment partners linked to multinational groups.

The company's estimated R30bn replacement cost has been written down to R1.5bn. Marsden said earlier there was debt of R1.2bn owing to trade creditors, including a shareholder loan of R350m. There was also up to another R600m of potential tax liabilities, and another R500m of environmental liabilities.

South African steel producers have been affected by a slowdown in domestic steel demand at a time when much cheaper and state-subsidised Chinese flat and long steel product imports have come flooding into the country. Demand for steel has also been tepid as the government's infrastructure programme has been slow to take off. Steel producers have asked for a protective tariff of between 10% and 15% on imports to discourage Chinese "dumping".

SA's largest steel maker, Arcelor Mittal SA, said last week it was putting its Vereeniging specialised long steel works into "emergency care" until the end of August, in so doing affecting 1,200 jobs.

It said that if it was "not sensible" for the plant to continue operations, it would "close down parts of it or close the entire operation down".

Source: Business Day


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