Ispat-Sidbec : Entering North America
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The Acquisition Contd...
Sidbec was the only DRI plant of its kind in
Canada. The DRI was fed, along with scrap and pig iron, into two
eccentric bottom tapping (EBT) arc furnaces that converted the metallic
charge into liquid steel. Two continuous-casting machines solidified the
liquid steel into steel slabs and billets. A 60-inch hot-strip Steckel
mill rolled the cast slabs into hot-rolled strip. Two 52-inch
cold-reversing mills then rolled the hot-rolled strip to thinner
cold-rolled strip. The cast billets were rolled in the rod and bar
mills. |
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Sidbec-Dosco's subsidiaries and joint ventures
manufactured a wide variety of steel products: Sidbec-Feruni (Ispat) Inc
and Deitcher Brothers (1992) Inc reclaimed scrap, Sorevco and Company,
Ltd, galvanized sheet, Walker Wire (Ispat) Inc and Acufil, Ltd
Partnership made wire products, and Delta Tube and Company, Ltd,
produced ERW pipe. The situation in Sidbec was different from that in
Trinidad and Mexico. Sidbec was producing near capacity. And although
the company had reported huge losses in 1991 and 1992 and a smaller loss
in 1993, it reported a net profit of C$11.9 million in the last full
quarter leading up to the sale to Ispat in 1994. Moreover, Sidbec’s
management had already taken many of the difficult decisions required to
set Sidbec on a profitable path before the sale to Ispat. During the
market downturn in the early 1990s, Sidbec slashed employment from 3,600
to 2,400, restructured operations, and cut costs.
"We had a difficult period in [1992-93], the two years prior to the
privatization. We were tight for cash, and the government didn’t know
what to do with the company. So we were living in a state of flux. Every
morning I would spend an hour with the finance people discussing who we
will pay today. On that basis, one could say that privatization came in
at the right time.”
- John Leboutillier, President of Sidbec-Dosc o since 1986.
Taking note of Ispat’s success at turning Imexsa (Mexico) and Carribean Ispat Limited (CIL), the Quebec government finally chose Ispat over other bidders to buy Sidbec-Dosco. The sale was finalized on Aug. 17, 1994. Ispat renamed the company Sidbec-Dosco (Ispat) Inc. Ispat paid C$71 million for the company, which included C$26 million as a reimbursement for profits earned in the first half of 1994. It injected an additional C$30 million in equity into the company, assumed outstanding debt and liabilities of C$280 million, and agreed to make C$100 million of capital upgrades over five years. In August 1994, Ispat acquired the capital stock of Sidbec-Dosco Inc. from the Government of Qu?ec. As part of the acquisition, Ispat Sidbec committed $73 million towards capital expenditure over a period of five years.
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