Evraz PLC is seeking to sell its Canadian and U.S. businesses as the Russian steelmaker grapples with the fallout from Moscow’s invasion of Ukraine, which includes sanctions against the company and its biggest billionaire shareholder.
Evraz said in a statement Wednesday that he would seek proposals for the North American operations, which include steel facilities in Alberta and Saskatchewan that serve the oil and gas industry. The Canadian company employs 1,800 people and Evraz has another 1,400 workers in the United States, where it has factories in Oregon and Colorado and a headquarters in Chicago.
A sale would allow the company to “unleash the standalone value of the North American business,” Evraz said in the statement. The company did not respond to a request for clarification.
Russian billionaire Roman Abramovich owns around 29% 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. It has also been hit with sanctions by Britain, the European Union and the United States.
Evraz does not face Canadian sanctions. Britain penalized the company in May, but authorities granted it a license to do business with its North American subsidiaries.
“Recent geopolitical tensions have resulted in significant corporate governance and operating challenges for Evraz,” chief executive Aleksey Ivanov said in a statement accompanying the company’s financial results earlier this month.
It was not immediately clear how much Evraz could generate from a sale of the North American business or a series of deals for its parts. Evraz says it is the largest manufacturer of large diameter rail and pipe in North America and is also a major supplier of small diameter pipe and tube products to the petroleum industry in the United States. Western Canada.
Last week, the North American steel unit reported earnings before interest, taxes, depreciation and amortization of US$296 million in the first half, compared to a loss of US$21 million in the same period of 2021.
Evraz North America operates Western Canada’s largest steel mill in Regina, which it acquired when it purchased Ipsco for $4 billion in 2008. In Alberta, it has operations in Calgary, Camrose and Red Deer. The company supplied 58% of the steel used to build the $21.4 billion Trans Mountain pipeline expansion project.
In June, Evraz announced the layoff of 170 people at its Regina plant and said another 50 to 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. A portion of the proceeds went to relief efforts in Ukraine.
After Britain took action against him, Evraz’s independent directors resigned from the board. As an entity under sanctions, global consulting firms, banks and other sponsors have also stopped working with Evraz.
The company says its working capital has been “heavily affected” by restrictions on cross-border payments, the use of trade finance instruments, restricted access to receivables and ocean freight insurance, as well as increasing freight rates.
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