Co-Steel and Gerdau Combine North American Steel Operations

On October 23, 2002, Canadian Co-Steel Inc. and Brazilian Gerdau S.A. combined their North American steel operations. The combined entity, Gerdau AmeriSteel Corporation, has anticipated annual revenues in excess of $2.5 billion, and its head office will be in Whitby, Ontario and executive office in Tampa, Florida. The deal is valued at between $1.02 and $1.34 billion.

The transaction was structured as a reverse takeover pursuant to which Co-Steel acquired Gerdau’s North American operations in exchange for shares representing approximately 74 per cent of the outstanding Co-Steel common shares after giving effect to the transaction. Existing Co-Steel shareholders retained an approximate 26 per cent interest in the combined entity following the transaction.

Co-Steel was represented by Goodmans LLP, with a team led by Dale Lastman and including Jeffrey Singer, Robert Vaux, Grant McGlaughlin, Richard Warren and Bram Atlin. John Alton, Joel Monson and Shauna MacDougall also of Goodmans, represented Co-Steel in its dealing with its lenders.
Gerdau was represented by Torys LLP, with a team led by Peter Jewett, Karrin Powys-Lybbe, Peter Ballantyne, Jennifer Soward, Eric So and Jonathan Weisstub (corporate), Robert Mansell and Sarah Gilbert (environmental), Don Roger and Katharine Alexander-Carew (real estate), Christina Medland (pension, benefits and employment), Jay Holsten, Carolyn Naiman and Paul Guthrie (competition), Phil Mohtadi and Michael Choiselat (Investment Canada), John Terry (trade), Jonathan Weisz and Tom Zverina in Toronto, and Jeff Gracer and Karin Bonner (environmental), Gary Litke (real estate), Peter Keenan (pension, benefits and employment) and Andy Beck (securities) in New York. Michael Knight, Willie Hudgins, Jr., and Nick Widnell of Collier Shannon Scott PLLC acted as U.S. antitrust counsel for the parties.

The syndicated lenders to Co-Steel, led by TD Bank, were represented by Steven Furlan and Keith Hunt of McCarthy Tétrault LLP. Chester Fisher, III, and Vi Smalley of Bingham McCutchen LLP in Hartford, Connecticut acted for The Prudential Insurance Company of America and the U.S. Private Placement Fund, which provided term financing to Co-Steel. Daniel Perry and Matt Malcho of Tucker Arensberg, P.C., in Pittsburgh acted for PNC Bank, National Association, which provided revolving credit financing to two U.S. subsidiaries of Co-Steel. The lenders to Gerdau were represented by Jon Holmstrom and Andrew Laidlaw of Fasken Martineau DuMoulin LLP, on behalf of a syndicate led by TD Bank.