News Release Archive
SYDNEY STEEL CORP.--Province Signs Agreement for Sysco Sale
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The province has signed a memorandum of understanding with Grupo
Acerero Del Norte of Mexico (GAN) for the sale of Sydney Steel,
Economic Development Minister Manning MacDonald announced today.
Under the terms of the agreement, GAN has agreed to buy Sydney
Steel for $26 million US with an initial down payment of $1
million US. The memorandum of understanding outlines a number of
details that must be settled before a final sale. Key among them
is the development of a long-range, detailed business plan for
Sysco.
"Today marks a major step forward in turning Sysco into a
successful, privately run steel plant," said the minister. "This
agreement lays out the last steps to a final deal.
"This is good for Sysco workers, good for the Sydney area, good
for the taxpayers of Nova Scotia and good for the future of the
plant."
The memorandum of understanding details a number of items for
continuing negotiation and resolution. The centre-piece of the
memorandum is a requirement for a long-range business plan, which
will detail all financial arrangements related to Sysco.
Other elements that must be included in the business plan
include: energy costs, labour issues, training, legal matters and
environmental issues. The memorandum of understanding is
confidential until a final agreement is in place.
GAN plans on making a significant investment in Sysco, expanding
and modernizing the steel plant. Provincial participation will
take the form of a guarantee on a portion of any new investment
that GAN makes in Sysco. The extent of GAN's investment will be
included in the business plan.
GAN is the largest steel producer in Latin America and among the
Top 10 steelworks in North America. In 1991, GAN bought and
modernized the government-owned steel company Altos Hornos de
Mexico. In 1996, it produced 3.5 million tonnes of liquid steel
and 2.9 million tonnes of finished steel. GAN also has interests
in chemicals, mining, and energy.
After a call for proposals in April, the province targeted GAN
for further negotiations. GAN was selected based on its
steel-manufacturing experience, its long-term plans for the
plant, its track record in product diversification and production
capacity, and the match between Sydney Steel and the company's
family of operations.
"We can see Sysco's potential for becoming a successful,
productive steel company," said Alonso Ancira Elizondo, executive
vice-president and CEO. "The plant is a good fit with our
long-term strategic plans and our other operations. Our company
sees a good future for Sydney Steel."
Starting in January, a technical team will be at work in the
plant completing a detailed business plan and preparing for the
transition to new ownership. The company and the province will
continue to work out the details of the sale through January
1998. The United Steelworkers of America will be consulted
throughout the process.
The province has also extended the time-frame for Sysco's line of
credit to March 1998. "This does not mean new money," said Mr.
MacDonald. "Sysco still has a balance remaining in its current
line of credit. It's simply an extension of time for a transition
to be worked out. We fully intend to have a sale wrapped up well
before that time."
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Contact: Manning MacDonald
Minister of Economic Development and Tourism
902-539-6032 or 902-424-5790
Jennifer MacIsaac
902-424-3219 or 902-456-3334
E-mail: macisaja@gov.ns.ca
ngr Dec. 24, 1997 9:10 a.m.
