Bidders Said to Seek U.S. Steel Canada, Essar Steel Tie-Up – by Scott Deveau and Sandra Mergulhao (Bloomberg News – February 29, 2016)

Some of the bidders for U.S. Steel Canada Inc., the former unit of U.S. Steel Corp. under creditor protection, are looking at combining its operations with those of Essar Steel Algoma, which is also in creditor protection, according to people familiar with the matter.

Combining the operations of U.S. Steel Canada and Essar Steel Algoma would create the kind of scale and synergies that would allow a new company to compete, the people said.

Those bidders include Bedrock Industries, a New York-based private equity firm focused on mining; the parent company of Essar Steel Algoma, a global fund backed by India’s Essar Capital Ltd.; and ERP Compliant Fuels, said the people, who asked not to be identified because the matter is private.

ERP Compliant has submitted a bid for U.S. Steel Canada, valued at about $1.5 billion, including debt, the people said. It is also said to be interested in acquiring the Essar Steel Algoma assets, they said.

Separately, a consortium of banks led by Deutsche Bank AG is also said to be weighing a bid to acquire Essar Steel Algoma, the people said. The syndicate gave Essar Steel Algoma a $200 million debtor-in-possession loan when it filed for creditor protection in November, and may also be interested in the U.S. Steel Canada assets, the people said.

Bids for U.S. Steel Canada’s operations in Hamilton and Nanticoke, Ontario, were due Monday.

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