Bidder offers R350m for Highveld Steel

The bankruptcy protection practitioners for Evraz’s distressed SA unit named International Resources Project as its successful bidder.

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Johannesburg - The bankruptcy protection practitioners for Evraz’s distressed unit in South Africa named International Resources Project as the successful bidder for the country’s second-largest steel producer.

IRPL is offering R350 million ($26 million) to settle creditors’ claims against Evraz Highveld Steel and Vanadium and R20 million as a payment to shareholders, bankruptcy protection officials said in a presentation on the company’s website Wednesday.

IRPL, based in Hong Kong, will invest a further R4.1 billion in the business over the next three to four years to refurbish equipment and build a 200-megawatt cogeneration plant, the practitioners said.

Highveld was placed under business rescue proceedings, the local equivalent of bankruptcy protection, in April after a slump in demand for the metal and a surge in cheaper imports left it with insufficient funds. Evraz, partly controlled by billionaire Roman Abramovich, paid more than a combined $678 million to buy Highveld in two transactions from Anglo American in 2006 and 2007.

IRPL “requires all suspensive conditions to be fulfilled by 31 March, 2016, and the implementation date to be no later than 30 June, 2016,” the practitioners said.

The offer also includes R150 million to help Highveld repay financing made available by South Africa’s Industrial Development Corporation, it said. Should IRPL’s proposal be accepted, the company would start production as soon as possible, raising this to 1.5 million tons annually in three to four years.

As an alternative, IRPL proposed to buy Highveld as a going concern for R350 million. If neither of the two proposals are accepted, the company will be wound down, and creditors may receive 10 percent to 14 percent of their claims, the practitioners said.

BLOOMBERG