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Apollo Buys US Steel Assets for $500M

PHILADELPHIA-An entity formed by affiliates of New York-based Apollo Management L.P. is acquiring raw materials operations of the Pittsburgh, PA-based steel company. US Steel will retain a 20% interest in the new company, which will continue to produce iron ore and coke.

By Marita Thomas | Updated on October 17, 2002

PHILADELPHIA-Pittsburgh-based US Steel has entered into an agreement with New York-based private equity fund, Apollo Management L.P., to sell its coke operations in Clariton, PA and Gary, IN, along with its Minntac iron ore operations in Mt. Iron, MN and Transtar, its wholly owned railroad/barge transportation services subsidiary, to a new entity being formed by Apollo for $500 million. US Steel, which is the largest steel maker in the US, will retain a 20% interest in the new company.

The deal provides U.S. Steel with capital to “redeploy capital to other potential uses, such as strategic acquisition opportunities, debt reduction or voluntary contributions to employee benefit plans,” says Thomas Usher, chairman, president and chief executive officer, in a statement. At the same time, the deal secures “a stable, long-term supply of our critical raw material requirements,” he adds.

A year ago, US Steel was split from Houston-based Marathon Oil Corp., a move that, according to published reports, cost the steel company several hundred million dollars in debt refinancing. US Steel has publicly announced plans to lead the domestic steel industry in consolidations, and Wall Street analysts have speculated that as many as a half dozen smaller domestic producers could be targets for acquisition.

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