* Plant has strategic importance but steel market tough
* Mittal family's Aperam bid valid until Friday -sources
* Terni to sell at a fraction of book value
* Yusco, JPMorgan, Apollo also interested
* Terni plant workers fear job cuts
By Silvia Antonioli
LONDON, Nov 21 A consortium led by stainless
steelmaker Aperam has raised its bid for Italian steel
plant Terni that its competitor Outokumpu has to sell, a deal
that would reshape the European stainless steel industry.
The consortium, including Italian steelmakers Arvedi and
Marcegaglia, submitted the higher bid last week - because
Outokumpu sees all bids so far as too low - and it is valid
until Friday, two sources with knowledge of the situation said.
Finland's Outokumpu agreed to sell the Acciai
Speciali Terni plant more than a year ago to gain approval for
its purchase of ThyssenKrupp's Inoxum unit.
The plant - considered one of Europe's most advanced
stainless steel mills - is of strategic importance due to its
vicinity to steel buyers in Italy, a major steel market, but its
profitability has been hard hit by a slump in the steel market.
Loss-making Outokumpu faces a massive writedown on Terni,
which is valued at more than 560 million euros ($750 million) on
its book but is expected to sell for a fraction of that.
"For Outokumpu all that matters at the moment is getting
their debt down but the sale of this plant now will not
strengthen their balance sheet considerably. If it strengthens
it somewhat they are already lucky," an industry expert said.
"But that plant is a champ in the strategic Italian market
and Aperam could get it for a very attractive price."
Besides the Aperam consortium, other parties interested in
the plant are Taiwanese steelmaker Yieh United Steel Corp
(YUSCO) and U.S. private equity funds Apollo and
JPMorgan's One Equity Partners.
Outokumpu said it hopes to complete the sale this year but
declined to comment further. Aperam, spun off by ArcelorMittal
in 2011 with the Mittal family retaining the biggest
stake, said it was still interested in the plant but did not
give any further details.
In an attempt to improve its finances, Outokumpu has also
been in talks to sell its high-performance alloy unit VDM, for
which bids are also much lower than expected.
HARD TO SAY GOODBYE
Outokumpu has twice asked the EU regulator, the European
Commission, to postpone the deadline for selling Terni because
it sees all the bids submitted so far as unsatisfactory.
Last month the Finnish producer also tried, without success,
to persuade the EU to let it keep the Terni mill, pledging
worsening market conditions meant it was no longer
anti-competitive to keep it.
Terni, about 100 km (62 miles) north of Rome, is a major
employer in Italy's Umbria region.
Workers expressed concern at the lengthening sale process
and at prospects of job cuts after the sale.
"There is a certain state of resignation here in Terni. We
have no idea what lies ahead for us," a worker who has been
employed by the plant for more than a decade said.
"There are doubts about Aperam's financial strength and
concerns regarding the fact that the Mittal family has proved it
has no scruples idling plants. On the other hand private equity
is a scary option: they could break up the plant and sell the
pieces," the worker said.
Luxembourg-based Aperam announced its ninth consecutive
quarterly net loss in the third quarter.
To battle excess supply and slow demand ArcelorMittal, idled
two blast furnaces in France last year and has temporarily shut
down other plants.
(Additional reporting by Maytaal Angel in London, Arno Schuetze
in Frankfurt and Ritsuko Ando in Helsinki; Editing by Louise