British Industrialist of Indian-origin Sanjeev Gupta's GFG Alliance on Monday announced a binding agreement to purchase all of the outstanding stock in US-based Keystone Consolidated Industries Inc (KCI) from Contran Corporation (Contran).
Under the terms of the deal, GFG Alliance company Liberty Steel USA will acquire KCI, including all its subsidiaries, for USD 320 million in cash, less certain assumed liabilities.
The company said the purchase is expected to close by the end of this month, subject to regulatory review.
"The Keystone acquisition is a core part of GFG's GreenSteel vision to become a leading US producer of high quality, cleanly produced steel," said Gupta, executive chairman of GFG Alliance.
"As we look ahead to the future, GFG will benefit from Keystone's century-long history, its robust operations, and its reputation for producing top quality steel," he said.
According to the GFG Alliance, the acquisition will vault Liberty into position as one of the leading producers of wire rod in the US.
"KCI and its businesses offer Liberty the chance to merge our existing US steel business with one of the country's most productive wire rod operations," said GFG North American CIO Grant Quasha.
"Combined with Liberty Steel Georgetown, KCI will increase our downstream capabilities, create critical synergies, add strong management and provide better value and products for customers as we advance our US steel business to our 5mt pa goal," he said.
GFG said Keystone Steel and Wire, a division of KCI, has an over 100-year-old history in the steel and steel products business and a strong reputation for quality and performance.
KCI recently posted its strongest results in its long history and adds a top-producing wire rod facility with a 1.1 mt capacity electric arc furnace (EAF), the market leading agricultural fence products of RedBrand, industrial wire, an MBQ/SBQ bar mill, three welded wire reinforcement mesh facilities and a PC strand facility to the Liberty Steel USA family.
The deal is financed by two large North American banks, who will be providing an asset backed loan facility and funds managed by BlackRock Financial Management Inc, who will be providing a term loan.
The GFG will contribute equity and its "unencumbered" Liberty Steel Georgetown plant to the transaction.
The GFG acquired Liberty Steel Georgetown, its Georgetown, South Carolina steel plant, at the end of 2017 from Arcelor Mittal, who had mothballed the plant.
The company restarted the plant in June this year and said it has been steadily ramping production to an estimated 400 kt run rate by the first quarter of 2019, with further expansion to follow.
The GFG said it has rehired over 100 employees at the site, recruited over 50 new employees, has revitalised the facility and has re-established its reputation to be the premier producer of high carbon wire rod in the US.
Together, the KCI and the Liberty Steel Georgetown will form the core of the GFG's North American business, which the company is looking to grow further with additional acquisitions in the coming months.
The GFG plans a diverse mix of assets for the US business, ranging from the revitalisation of steel plants that had previously been taken offline, such as Georgetown, to those which are operating and performing very well like KCI.
While the current portfolio is focused on value added long steel products, the company said it is actively pursuing additional acquisitions in flat products and further downstream capabilities to drive towards 5 mt pa of capacity by 2020.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)