Valdeen Shears Neptune
The sole investor to have expressed an interest in purchasing the now defunct ArcelorMittal steel plant at Point Lisas may be on the verge of pulling out.
In March, management shuttered the plant, as steel tycoon Lakshmi Mittal announced a pullout and sent home more than 600 workers.
The prospective buyers are being represented by an entity called New Era Business Services. They told the T&T Guardian that they were willing to spend as much as $100 million in acquiring the facility.
In an interview with the T&T Guardian, the representative disclosed that the firm is based in Charlieville, Chagauanas, while “the investors are regional, with an international reach.”
Even as their identity remains unknown, they have maintained their interest and rapport with the Steel Workers Union of Trinidad and Tobago (SWUTT) since the start of the ArcelorMittal fallout.
However, the representative said some aspects of the ongoing liquidation process were giving them second thoughts.
“We and the union were assured that the plant would be sold as a whole entity and not stripped. But now we are seeing where properties are being placed on the public market for sale. It raises questions about the integrity of the entire process,” stated the representative.
This includes, so far, the Goodwood Park house in which Mittal lived when in the country, along with two other executive residential houses owned by the company, as well as a corporate box at the Queen’s Park Oval.
When asked if they would consider bidding on these properties, the spokesperson stated that the investors had indicated from the start that they would only tender for a complete package.
“The investors are not prepared to take part in any part packaging. It was always understood to be a packaged deal. Is this not stripping the company?” he queried.
Liquidator Christopher Kelshall, in a telephone interview, responded by stating that while the properties were all listed in the auditor’s report as company assets, he had a duty to the owners (Mittal) to look after the sale of surplus assets.
“Any investor would get a completely functioning plant. In due course they will be invited to express interest, and get a package to bid on,” stated Kelshall.
He maintained, though, that the properties were unoccupied.
Market conditions unchanged
The Mittal family bailed out of Trinidad and Tobago in the face of a deep slump in global steel prices, caused by oversupply from China. Market conditions are the same for the potential new investor as they were for the previous owners. How can they make it work?
“We did our feasibility study and Mittal did not tap into the Caribbean market, those for diversified steel, specialised high-end and by-products,” the representative stated.
“This is one of the reasons we are not daunted by the production of cheap steel by the Chinese,” he added.
The greater incentive, though, is the DR-3 machine located on the site, which supports the production of specialised steel and by-products.
The machine is the only one of its kind in the Western hemisphere and ensures the viability of the plant to compete easily in the steel market.
Rumours the machine may be shipped back overseas have raised a red flag for the investors, said their representative.
“What that machine can do is beyond what any competition can do on this side of the world. We hope it is not stripped and sent back to its parent company,” he stated.
They are even considering acquiring the recently defunct Centrin Plant, where over 200 workers lost their jobs. That plant depended heavily on by-products from the Point Lisas steel plant for its sustainability.
The investors, he said, may take their business and monies to neighbouring Suriname or Guyana.
That aside, if all goes well, the investors intend to set up shop within months of purchasing, with a couple months to purge the plant and a further three months’ incubation period, then moving to full operational standards.
As for its workforce, the business consultant said, the investors maintained a rapport with the union to ensure they would have the necessary human resources.
They are also prepared to engage in re-educating and redeploying where necessary, he said.
He noted that one of Mittal’s biggest disadvantages, which had forced him to close shop here and in other countries, was the cost of labour.
However, the investors are prepared to offer workers what he described as “reasonable” salaries along with the benefits of profit sharing and stock options.
“They will now be part of the ownership of the company/plant,” he added.
While they have anticipated further expenditure of up to $100 million, they are confident that this will come from projected profits.
The representative stated they had no intention of inheriting a debt, one of the conditions for purchase that the previous owners had put to the Government.
Initially, Government had been offered the plant for just $1, while the plant was said to have incurred a $1.3 billion debt.
According to the investor, the debt figure had been revised and had increased significantly to the tune of $3.5 billion.
The only advantage to liquidation, he explained, is that you do not inherit the company’s debt. However, the representative said he is yet to sit down and discuss the issue with anyone in Government.