Steel execs to be based in Tampa
© St. Petersburg Times
TAMPA -- Tampa will become the operational headquarters for one of the largest steel minimill companies in North America under a deal announced Tuesday by Co-Steel Inc. of Canada and Gerdau S.A. of Brazil, the owner of Tampa's AmeriSteel Corp.
The two companies plan to combine their U.S. and Canadian steel operations to form Gerdau AmeriSteel Corp., which will own 11 minimills and 29 fabricating and specialty products businesses. The mills recycle scrap steel into various types of steel bars, including rebar, beams and wire rods. The other businesses make products such as wire mesh, custom-cut rebar and railroad spikes. Combined revenues are expected to be more than $1.7-billion a year.
The transaction comes when the steel industry has been in an extended recession, with many companies filing for bankruptcy in the face of slumping demand and competition from foreign imports.
"When you've got a third of the North American industry in bankruptcy, things couldn't get much worse," said AmeriSteel president Phillip Casey, who will be president of the combined company.
By consolidating, Gerdau and Co-Steel expect to save about $23-million a year through freight and production efficiencies and improved purchasing power. No reduction in employment is anticipated. Together the companies have 4,800 employees.
"Gerdau and Co-Steel have created an attractive transaction that is financially sound and creates an enterprise that possesses the professional resources to lead the resurgence of the North American steel industry," said Jorge Gerdau Johannpeter, Gerdau's chairman.
The deal is structured as a reverse takeover. Co-Steel plans to issue 146.6-million shares of its common stock to Gerdau in exchange for ownership of Gerdau's U.S. and Canadian steel operations. Gerdau, along with its managers and institutional shareholders, will own 74 percent of the combined company, which then will change its name to Gerdau AmeriSteel.
Subject to exchange approval, the stock will continue to trade on the Toronto Stock Exchange. Company officials said they eventually would like to list the stock on the New York Stock Exchange.
Although top executives will be based in Tampa, the company's official headquarters will remain in Whitby, Ontario, where Co-Steel is based.
No immediate impact is expected on AmeriSteel's Tampa headquarters, which employs about 80 people.
"Long-term, all administrative operations will come here to Tampa and that may create some jobs," AmeriSteel spokesman Ron Woerner said.
Gerdau's minimills are located in Jacksonville; Charlotte, N.C.; Jackson and Knoxville, Tenn.; Cartersville, Ga.; Cambridge, Ontario and Selkirk, Manitoba. Co-Steel's are in Whitby, Ontario; Sayreville and Perth Amboy, N.J.; and Gallatin County, Ky. The combined company will have 6.8-million tons of rolling capacity, making it the one of the largest North American steel producers. One of Ameri-Steel's rebar fabricating facilities is in Plant City.
Pending approval by regulators and Co-Steel's shareholders, the transaction is expected to close during the fourth quarter.
-- Helen Huntley can be reached at email@example.com or (727) 893-8230.
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