Evraz South Africa's Creditors Vote in Favor of Rescue Bidby
Evraz Highveld creditors approved International Resources bid
IRL offering 350 milion rand to settle creditors' claims
Creditors of Evraz Plc’s distressed unit in South Africa approved a bid by International Resources Ltd. to buy the country’s second-largest steel producer, saving it from bankruptcy.
Creditors “voted in favor of the business rescue plan whereby the company avoided liquidation and remains in business,” Evraz Highveld Steel and Vanadium Ltd. said in a statement on Tuesday. “In addition, the business rescue plan provides for a controlled wind down should the IRL offer not be consummated, which is significantly better than liquidation.”
IRL is offering 350 million rand ($26 million) to settle creditors’ claims against Evraz Highveld and 20 million rand as a payment to shareholders, bankruptcy protection officials said in a presentation on the company’s website Sept. 16. The company, based in Hong Kong, will invest a further 4.1 billion rand in the business over the next three to four years to refurbish equipment and build a 200-megawatt cogeneration plant, raising steel output to 1.3 million metric tons annually, Evraz Highveld said. The offer also includes 150 million rand to help Highveld repay financing made available by South Africa’s Industrial Development Corp., it said.
Highveld was placed under business rescue proceedings, the local equivalent of bankruptcy protection, in April after a slump in demand for the metal and a surge in cheaper imports left it with insufficient funds. Evraz, partly controlled by billionaire Roman Abramovich, paid more than a combined $678 million to buy Highveld in two transactions from Anglo American Plc in 2006 and 2007.