October 10, 2012 / 3:45 PM / in 5 years

Bidders line up for Thyssen Steel Americas mills-source

FRANKFURT (Reuters) - Global steel companies including ArcelorMittal ISPA.AS, U.S. Steel (X.N) and POSCO (005490.KS) have made first round bids for ThyssenKrupp’s (TKAG.DE) steel mills in Brazil and the United States, a person close to the process said.

Nucor (NUE.N), Japan’s JFE Steel Corp (5411.T), China’s Baosteel (600019.SS) and Brazil’s CSN SCNA3.SA also submitted bids, the person said on Wednesday.

ThyssenKrupp said in May it was considering all options for the loss-making steel mills, including a partnership or a sale, to halt the losses and concentrate on its European business.

The plants were meant to give ThyssenKrupp a foothold in the Americas, but the mills have had to struggle with rising costs and sluggish demand.

It was not immediately clear whether the bidders made offers for just one steel plant or for both mills, which are part of ThyssenKrupp’s Steel Americas unit.

Chief Executive Heinrich Hiesinger wants to sell the mills separately for at least their combined book value of 7 billion euros ($9 billion). [ID:nL5E8JQ3ZC] But the source said that bids were at only about 3-4 billion euros.

Another source said that the price tag for the Brazilian mill alone, for which he said Brazil’s CSN had made a bid, would not exceed $4 billion. CSN was not immediately available to comment.

POSCO, ArcelorMittal, U.S. Steel and JFE declined to comment. Baosteel had no immediate comment, and Nucor was not immediately available.

Bankers had told Reuters that ThyssenKrupp was considering wooing suitors for Steel Americas with incentives such as purchasing guarantees to get a better price.

“There is still a lot of interest (in Steel Americas), which has further been bolstered by visits to the plants,” a ThyssenKrupp spokesman said, declining to comment further on bids received so far.

Iron ore miner Vale VALE5.SA, which owns just over a quarter of Thyssen’s Brazil plant - finishing slab mill CSA -reaffirmed that it was not interested in buying Thyssen’s stake.

Bankers have said that due to its shareholding the company was bound to be involved in the sale in some way.

Brazil’s Usiminas (USIM5.SA) and Gerdau (GGBR4.SA), Japan’s Nippon Steel (5401.T) and AK Steel (AKS.N) - which had been named as possible bidders - have not made any indicative offers, the first source said.

Bankers had said indicative offers were due by September 28, a date which ThyssenKrupp had not confirmed.

    Any sale could be sealed by mid-2013 but could take until 2014 to be finalized, Ron Stowe, director of product coordination at ThyssenKrupp’s mill in Calvert in the United States, was quoted as saying in trade publication Metal Bulletin this week.

    The Thyssen spokesman said Stowe’s comments were the personal opinion of a staff member not involved in the process.

    The source close to the process said the next round of bids were due in mid-November and signing of the deal was expected by the year-end.

    “Due to the complexity of the process and the differing interests in one or both plants, we cannot provide details on the further time plan,” the Thyssen spokesman said.

    Steel Americas, the division that includes both sites, posted an adjusted loss before interest and tax of 778 million euros for the nine months to the end of June and is reportedly heading for a full-year loss of more than 1 billion euros.

    ThyssenKrupp, which is being advised on its review of Steel Americas by Goldman Sachs (GS.N) and Morgan Stanley (MS.N), is due to publish results for its full fiscal year to the end of September on December 11.

    German daily newspaper Die Welt earlier on Wednesday said at least five interested parties had submitted indicative offers for the mills.

    ($1 = 0.7754 euros)

    Reporting Arno Schuetze and Tom Kaeckenhoff; Additional reporting by Nikola Rotscheroth, Yoku Inoue, Phil Blenkinsop, Hyunjoo Jin, Stephen James, Yuanyuan Lian, Jeb Blount and Sabrina Lorenzi; Editing by Maria Sheahan and Jane Merriman

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