TORONTO -- United States Steel Corp. said on Wednesday it will evaluate a possible bid for Stelco Inc., Canada's biggest steelmaker, which is currently under bankruptcy protection.
If U.S. Steel decides to join the hunt for Stelco, it would add to a list that includes Russia's OAO Severstal and a proposal from GMP Capital and GE Capital Canada.
"We did file the necessary paperwork to participate in the court administered restructuring for Stelco," said U.S. Steel spokesman John Armstrong.
"The reason we're doing that is it will enable us to gather the preliminary information that we need to determine if we in fact have any interest in Stelco."
Armstrong said U.S. Steel will be represented in an Ontario court on Thursday when Stelco attempts to get a bailout plan with Deutsche Bank AG approved.
Earlier, Stelco said it had forged a new bailout plan with Deutsche Bank that does not require the steelmaker to have a supply contract with General Motors.
If the amended financing plan between Stelco and Deutsche Bank gets court approval, it would create a bid that other potential suitors must surpass if they wish to take over Canada's largest steelmaker.
"Others now know how valuable the business is and will have to act in a clear and decisive way to better this very good refinancing plan," Stelco's chief restructuring officer, Hap Stephen, said in a release.
The original C$900 million ($762 million) bailout plan from Deutsche Bank crumbled earlier this week when Stelco failed to clinch a no-strike deal with the United Steelworkers union that was satisfactory to GM, its biggest customer.
GM, which buys 10 percent of Stelco's steel annually, has since said it will seek an alternative supplier next year.
Stelco said the new financing plan scraps a management equity provision and will open the way for a broader-based capital raising process. It is also a sign of support from Deutsche Bank and bondholders to lift the steelmaker out of creditor protection, the company said.
"They obviously believe our exit is possible and should be supported," Stelco chief executive Courtney Pratt said in a release. "Hopefully, other stakeholders and our unions will see it that way as well and will support this opening bid which others are free to top."
UNION PLANS TO FIGHT DEAL
A spokesman for the United Steelworkers of America said the union has yet to see details of the amended plan but will likely attempt to block its court approval after seeing the latest press release from Stelco.
The union said Stelco is fixated on setting up Deutsche Bank as a stalking-horse bid and is not showing a commitment to the long-term viability of the company.
"What we're more interested in is opening the bidding process and looking for someone that is going to look after the interests of the folks in the community and long-term stability," said Ken Neumann, national director at the Steelworkers.
"We want a bidding process that's fair and looks at someone who is interested in preserving the interests of the community and pensioners."