Republic Engineered Steel Acquired by Mexican Steelmaker

Mexican minimill giant Grupo Simec has purchased bankrupt Republic Engineered Products.

Republic Engineered Products Inc., the largest producer of SBQ steel in North America, has been acquired by Industrias CH, S.A. de C.V. for $229 million, the Mexican group reports.

Mexico City-based ICH acquired 49% of Republic and its wholly owned subsidiary Grupo Simec acquired the remaining 51%, following a purchase agreement with Republic’s majority shareholder, Perry Capital.

Republic now becomes a subsidiary of Grupo Simec, based in Guadalajara, Mexico.

ICH stated it plans to pay down Republic’s outstanding debt of $166 million over the coming year, and will make an immediate payment of $71 million.

ICH operates four EAF-based steelmaking plants and four processing plants, producing specialty steel long products, welded pipe, structurals, and rebar. Its most recent acquisitions have been Grupo Simec in 2001 and the Mexican steel assets of Spain’s Corporacion Sidenor in 2004.

Perry Capital purchased Republic's assets in December 2003 when the organization completed a bankruptcy reorganization. In November 2004, filed a registration to launch an initial public stock offering, and the offer from ICH was presented during the registration process.

Joseph F. Lapinsky, Republic's president and CEO, stated, "This combination will create an international strategic alliance. Republic will continue to operate as a stand-alone business but will have a very strong resource in Mexico as we strengthen our relationships with customers expanding in Mexico and South America.”

Lapinsky emphasized that Republic’s current capital-investment program will continue. The company is adding a new billet caster at its melt shop in Canton, OH.

According to Sergio Vigil, director and chief financial officer of ICH, "The addition of Republic to our family of companies will give us a presence in the U.S. for the first time. Republic has a bright future, and our commitment to the business will make it even stronger. Republic also will be a valuable resource as we pursue additional U.S. business for our other lines of steel products."

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