Mexico's Grupo Simec Acquires U.S. Steelmaker Republic Engineered Products

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Mexican minimill giant, Grupo Simec (AMEX:SIM)(Mexico City, Mexico) has bought out bankrupt Republic Engineered Products (REP) (Akron, Ohio), a subsidiary of holding company PAV Republic Incorporated, for about $229 million. Grupo Simec will own 50.2% of REP, and its parent, Industrias CH (ICH), will own 49.8%.

Cimec has not revealed what its future plans for REP might include, except to say that it planned to continue mill upgrades, including a $50 million investment in a new caster at the Canton mill, as reported earlier by Industrialinfo.com. REP's debt at the end of 2004 was $220 million, and now stands at about $166 million. New York City-based Perry Capital had previously bought the company out of bankruptcy in August of 2002 for $463 million. The purchase will make Simec the largest North American producer of special bar quality steel.

REP, with six North American minimills, is one of the largest producers of special bar quality steel used for automotive and heavy equipment applications. Its major customers include DaimlerChrysler, Ford, General Motors, and their various tier suppliers. REP's plants have a combined capacity of two million metric tons of liquid steel and 1.7 million metric tons of finished steel products. Facilities include a Cold Finished Plant in Gary, Indiana; a Hot Rolled Plant in Lackawanna, New York; a Hot Rolled Plant (with major upgrade projects scheduled) and a Bloom Casting Facility in Canton, Ohio; a Rolled Bar Plant in Lorain, Ohio; a Cold Finished Plant and a Central Machining and Fabrication Facility in Massillon, Ohio; and a Cold Finished Bar Plant in Hamilton, Ontario.

Grupo Simec, a subsidiary of Industrias CH (ICH)(Mexico City, Mexico), produces construction-grade steel at its minimills in Guadalajara and Mexicali - non-flat products, such as angles, channels, flat bar, I-beams, rebar, and structural angles - primarily for the construction industry, metal fabricators, and steel service centers. The Guadalajara mill produces about 350,000 tons of steel billets and 480,000 tons of finished steel a year. The Mexicali minimill produces about 430,000 tons of steel billets and 250,000 tons of finished steel a year.

ICH is a large holding company dealing in steel minimills, primarily in Mexico and Central America. REP will be its first venture in the U.S. The company manufactures industrial ovens, furnaces, stainless steel tools, seamed pipe, steel bars, rods, plates, sheets and structural shapes. It operates through three primary divisions: specialty steel, seamed pipes, and commercial steel sections. ICH owns about 85% of Grupo Simec.

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