Wednesday, December 22, 1999
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The Halifax Herald Limited
Tories ponder 'expression of interest' in Sysco
By Murray Brewster / The Canadian Press
Nova Scotia has received an offer for its money-losing Sydney Steel mill, sources
say.
One of the suitors submitted its bid Dec. 15 to the Dutch investment bank trying
to sell the Cape Breton facility, industry and government sources who did not
want to be identified said Tuesday.
"What we have is an expression of interest that we're looking at," Premier John
Hamm said when asked whether there was a bid on the table for Sysco.
Hamm said he wouldn't get into detail about the offer, saying he wouldn't term it
concrete, but it was more than informal.
Two companies have been courted by the ABN Amro bank. One bidder, the
Reserve Group based in Ohio, wants to operate the mill for several months
before signing a final purchase agreement.
It also wants the government to assume full environmental responsibility for the
plant site and possibly buy out some of the 700 workers or give them early
retirement.
Sources said the submitted bid is from Reserve but there was no immediate
indication how much the company is willing to offer.
Analysts in the steel industry and government insiders have privately said the mill,
with its high-tech electric-arc furnace, could fetch as much as $40 million.
The second bidder, an unidentified company from the western United States, has
yet to put in an offer.
The Tory government has set Dec. 31 as the deadline for a decision on Sysco's
future.
That's when ABN Amro's contract to find a buyer runs out. The new year is also
when an agreement ends with Hoogovens, the Dutch firm that has been managing
the plant.
Hamm campaigned on a promise to close the mill, which has swallowed nearly $3
billion in government subsidies, unless a buyer could be found. In the last fiscal
year, Sysco lost $31 million.
The province has apparently not spoken with the bidders, leaving the matter in the
hands of ABN Amro, which will present Sysco's board of directors with a
recommendation.
Jim Vibert, the premier's director of communications, said if there are to be
negotiations, the board will likely handle them but the provincial cabinet will have
the final say.
"We're determined to get a good deal," Vibert said.
"If there's not a good deal, then the plant will be closed."
Sysco specializes in producing rails for the moribund railway sector, which has
seen a lot of corporate consolidation in North America, including Monday's
announcement involving Canadian National Railway and Burlington Northern
Santa Fe.
Other steel mills in Canada, such as Stelco and Dofasco, cater more successfully
to the booming auto, construction and appliance sectors.
With David Jackson, provincial reporter
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Copyright ¸ 1999 The Halifax Herald Limited |
