Severstal said to be weighing offers for U.S. steel plants

Severstal is assessing offers for its plants, including the one suburban Detroit, people familiar with the matter said.
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NEW YORK (Bloomberg) -- OAO Severstal, the Russian steelmaker controlled by billionaire Alexey Mordashov, said it is considering “a range of strategic options” for its North American unit amid reports the business may be sold.

“No decision has yet been taken as to which, if any, such option might be pursued,” the company said in a regulatory statement today.

Severstal is assessing offers for its plants in suburban Detroit and Columbus, Miss., people familiar with the matter said Saturday, asking to not be identified because the deliberations are private. The bidders include U.S. Steel Corp. and number more than two, these people said today.

Spokeswomen from U.S. Steel and Severstal declined to comment.

The U.S. sites have total annual capacity to produce 5.2 million metric tons of steel. The Russian company has invested more than $2 billion in the assets since 2004.

Cia. Siderurgica Nacional SA has made an approach for the assets, for which Severstal may receive as much as $1.5 billion, according to a report last week in the Wall Street Journal. A spokesman for Sao Paulo-based CSN declined to comment today.

Changes in North America 

Severstal North America, the U.S. subsidiary of Severstal, replaced nearly all of its senior management last year in an attempt to create "profitable, sustainable growth," CEO Saikat Dey said.

Dey replaced former CEO Sergei Kuznetsov in September, and a flurry of management changes followed. Within weeks, nearly all of it top management had been replaced, including its CFO and three vice presidents.

Dey said the changes reflect the company's shift in priorities.

The old team "was focused on building new assets, investing in Dearborn and maintaining an automotive business; doing the [mergers and acquisitions] and the divestment," he said. "That was probably the right team. Now we face a different challenge … a change in focus."

Dey said late last year that the new direction of Severstal is focused on higher-margin, or value-added, products thanks to the investments in North America.

"We believe, we have the potential to make these assets more profitable," Dey said. "All it takes is good driving."

Severstal North America will also focus on "cash discipline" and quality, Dey said.

Crain's Detroit Business contributed to this report.

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