Evraz to acquire IPSCO's Canadian plate and pipe business from SSAB for a net cost of $2.3 bln

Evraz Group S.A. today announced the acquisition of IPSCO’s Canadian plate and pipe business (“IPSCO Canada”) for a net cost of $2.3 bln. The final value will be subject to certain closing adjustments.With plants in Regina, Calgary and Red Deer, IPSCO Canada is a leading North American producer of steel plate, as well as pipe for the oil and gas industry. This purchase is yet another step in the implementation of Evraz’s strategy to build a strong platform in the North American downstream markets of steel plate and tubular products. Commenting on the transaction, Alexander Frolov, Evraz’s Chairman and CEO, said, “Following the successful acquisition of Oregon Steel Mills, this transaction will further enhance Evraz’s existing North American presence in high value-added steel segments. This deal will increase our exposure to the attractive energy and infrastructure sectors throughout the region. We expect substantial synergies from the combination of IPSCO Canada and Evraz’s existing North American operations. We are delighted to acquire a company with the long history and outstanding track-record of IPSCO Canada and look forward to welcoming IPSCO Canada’s employees to the Evraz family of companies. ”Under the structure of the agreed transaction, Evraz will acquire the IPSCO Tubulars business from SSAB for $4.025 bln. Evraz has also entered into definitive back-to-back agreements with TMK, Russia’s leading tubular player, to sell certain of the acquired US businesses for $1.2 billion. In addition, Evraz expects to sell the remaining acquired US businesses of IPSCO Tubulars to TMK for approximately $0.5 billion in 2009. All of these transactions are subject to certain closing adjustments and conditions. As a result of these transactions, the net cost of the acquisition for Evraz is expected to be approximately $2.3 bln. The transaction will be financed by a combination of a bridge loan raised at the Evraz level, as well as a non-recourse term loan arranged at the acquired company level. Credit Suisse Securities (Europe) Limited and Goldman Sachs International are acting as joint financial advisors to Evraz. Cleary Gottlieb Steen & Hamilton LLP and Blake, Cassels & Graydon LLP are acting as legal counsel to Evraz.