HAMILTON, ON, June 6 /CNW/ - Stelco Inc. (TSX: STE) announced today that
it has entered into an agreement providing for the sale of its 44.6% interest
in the Wabush mine joint venture to Consolidated Thompson Mines Limited
("Consolidated") for total consideration with an estimated value to Stelco of
The total transaction value includes cash of $44.4 million, assumed
liabilities estimated at $94.6 million, approximately 1.9 million warrants to
purchase shares of Consolidated valued at $1.7 million, and an agreement for
Consolidated to supply iron ore pellets to Stelco until December 31, 2009
valued at $22.7 million. In addition, Stelco will retain its share of the
Wabush iron ore inventory, which is valued at approximately $35.7 million.
The Wabush mine joint venture holds assets including the Scully iron ore
mine and related assets situated at or near Wabush, Newfoundland and Labrador,
and pelletizing facilities and related infrastructure located in Quebec.
Wabush joint venture partners include Stelco, Cleveland-Cliffs Inc. (26.8%),
and Dofasco Inc. (28.6%). The sale of Stelco's interest in Wabush is the
result of an agreement between Stelco and Cleveland-Cliffs Inc, the mine's
operating partner, with Consolidated providing for the sale of the interests
of each of Stelco and Cleveland-Cliffs Inc to Consolidated.
"The Wabush mine requires some redevelopment work which has an associated
capital requirement. Consolidated is better positioned to complete this work
given operating synergies available to them with their neighbouring mining
interests," said Rodney Mott, President and CEO. "This transaction will
improve our financial position and accelerates our efforts to surface value in
Stelco," added Mott.
Completion of the transaction is subject to the execution of definitive
agreements and the receipt of all required third party consents and regulatory
approvals. Dofasco Inc., the owner of the remaining 28.6% interest in the
Wabush mine joint venture, has a right of first refusal over the proposed
transaction which may be exercised for a period of 90 days in accordance with
the provisions of the project agreements governing the joint venture. It is
expected that the completion of the transaction will occur shortly following
the waiver or expiry of the right of first refusal in favour of Dofasco Inc.
Stelco's iron ore interests in the Tilden and Hibbing mining projects are
not impacted by this transaction.
Stelco is one of Canada's largest steel companies. It is focused on its
two Ontario-based integrated steel businesses located in Hamilton and in
Nanticoke. These operations produce high quality value-added hot rolled, cold
rolled, coated sheet and bar products. To learn more about Stelco and its
businesses, please refer to our Web site at www.stelco.com.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
This press release contains "forward-looking information" that is based
on Stelco's expectations as of the date of this press release or as of the
date which such information is identified to be given. This forward-looking
information includes, among other things, factors relating to the business,
operations and prospects of Stelco, including information regarding the
proposed sale of Stelco's interest in the Wabush mine joint venture. Often,
but not always, forward-looking information can be identified by the use of
words and phrases such as "plans", "expects" or "does not expect", "is
expected", "budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or "believes", or variations of such
words and phrases or states that certain actions, events or results "may",
"could", "would", "might" or "will" be taken, occur or be achieved.
Forward-looking information involves known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of Stelco to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking
information. Actual results, performance and achievements are likely to
differ, and may differ materially, from those expressed or implied by the
forward-looking information contained herein. Such forward-looking information
is based on a number of assumptions which may prove to be incorrect,
including, but not limited to: the successful negotiation and execution of
definitive agreements relating to the Wabush sale transaction, the
satisfaction of the conditions precedent to such transaction, iron ore prices
and the value of assumed liabilities and off-take arrangements. While Stelco
anticipates that subsequent events and developments may cause Stelco's views
to change, Stelco specifically disclaims any obligation to update this
forward-looking information. This forward-looking information should not be
relied upon as representing Stelco's views as of any date subsequent to the
date of this press release.
For further information:
For further information: Rodney B. Mott, President and Chief Executive
Officer, Stelco Inc., (905) 528-2511, Extension 2020