Evraz PLC is looking to sell its Canadian and U.S. operations as the Russian steelmaker struggles with the fallout from Moscow’s invasion of Ukraine, which includes sanctions against the company and its billionaire major shareholder.
Evraz said in a statement on Wednesday that it would solicit proposals for the North American operations, which include steel facilities in Alberta and Saskatchewan that serve the oil and gas industry. The Canadian business employs 1,800 people and Evraz has another 1,400 workers in the U.S., where it has plants in Oregon and Colorado and a head office in Chicago.
A sale would allow the company to “unlock the stand-alone value of the North America business,” Evraz said in the statement. The company did not respond to a request for further details.
Russian billionaire Roman Abramovich owns about 29 per cent of Evraz. In March, weeks after Russian troops invaded Ukraine, Canada imposed sanctions on Mr. Abramovich as a close associate of Russian President Vladimir Putin. He has also been hit with sanctions by Britain, the European Union and the U.S.
Evraz does not face Canadian sanctions. Britain penalized the company in May, but authorities there granted a licence allowing business with its North American subsidiaries.
“Recent geopolitical tensions have given rise to significant corporate governance and operating challenges for Evraz,” chief executive officer Aleksey Ivanov said in a statement accompanying the company’s financial results earlier this month.
It was not immediately known how much Evraz might generate from a sale of the North American business, or series of deals for its parts. Evraz says it is North America’s largest rail and large-diameter pipe manufacturer and it also is a major supplier of tubular goods and small-diameter pipes for the Western Canadian oil industry.
Last week, the North American steel unit reported earnings before interest, taxes, depreciation and amortization of US$296-million in the first half of the year, compared with a US$21-million loss in the same period in 2021.
Evraz North America operates Western Canada’s largest steel mill in Regina, which it acquired in its $4-billion purchase of Ipsco in 2008. In Alberta, it has operations in Calgary, Camrose and Red Deer. The company supplied 58 per cent of the steel being used to build the $21.4-billion Trans Mountain oil pipeline expansion project.
In June, Evraz announced the layoff of 170 people in its Regina plant, and said another 50-75 workers would leave the company after completing a contract. Evraz blamed the cyclical nature of the business.
Mr. Abramovich was known as the owner of Chelsea Football Club in Britain before the government forced him to sell it as part of the sanctions against him. Some of the proceeds went to relief efforts in Ukraine.
After Britain took the actions against him, Evraz’s independent directors resigned from the board. As an entity under sanctions, global consulting companies, banks and other sponsors stopped working with Evraz as well.
The company says its working capital has been “greatly affected” by restrictions on cross-border payments, the use of trade finance instruments, restricted access to receivables and marine cargo insurance, as well as increasing freight rates.
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