Evraz sells part of North American subsidiary
Steel maker Evraz has agreed the sale of part of its North American business for $51m in cash.
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Russia's largest steel maker, which is listed on the FTSE 250, said its subsidiary Evraz North America had agreed to sell its structural tubing business to Maruichi Oregon Steel Tube for roughly $51m, including approximately $8.5m proceeds from the sale of inventories.
Evraz, which in December shelved plans for an initial public offering (IPO) of the North American unit due to the drop in the price of oil, said proceeds from the disposal would be re-invested in the subsidiary as well as used to pay down balances of its asset-based revolving credit line.
The sale of the structural tubing facility, which produces 5,000 metric tonnes/month of hollow steel sections (HSS) for construction, industrial and agricultural applications, is in line with the group's recent strategy of divesting of non-core businesses.
It sold Vitkovice Steel in the Czech Republic last April and also last year shut down operations at Evraz Claymont in the US.
"The structural tubing business does not align with our strategic priorities," said Conrad Winkler, president and chief executive of Evraz North America.
"We are pleased to sell it to Maruichi with an agreement to supply a significant part of their steel coil needs, and we appreciate their interest in retaining the seasoned workforce."
In January, Evraz's full-year consolidated crude steel production and output of steel products, net of re-rolled volumes, dropped by 4% and 5%, respectively.
Prices for steel products were hit by headwinds in global markets and local currencies in Russia and Ukraine.
However, the fourth quarter picked up with production of steel products, net of re-rolled volumes, rising 6%. It was driven by a 31% increase in production of semi-finished products due to higher shipments of more profitable export billets and slabs.