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Mexico's President Urges Ternium or ArcelorMittal to Acquire AHMSA in a Stirring Saga
In a saga of steel and strategic maneuvers, Mexico's esteemed President, Andres Manuel Lopez Obrador, has reportedly spurned a proposal from US-based Argentem Creek Partners to purchase Altos Hornos de Mexico. Instead, he has proposed the esteemed steel entities Ternium or ArcelorMittal as potential buyers in a bid to salvage the company.
Speaking from the grandeur of the National Palace in Mexico City, President Lopez Obrador revealed that the Secretary of the Treasury, Rogelio Ramirez de la O, has been entrusted with the task of engaging with steelmakers who possess operations in Mexico. Specifically, he mentioned reaching out to the prominent companies based in Nuevo Leon and Lazaro Cardenas, alluding to Ternium and ArcelorMittal, respectively.
Taking matters into his own hands, the president emphasized his willingness to personally engage with the presidents and owners of these steel entities, urging their assistance and investment in AHMSA, under the condition that the company's debt to the government is addressed. While the president stressed that the debt will not be forgiven, he suggested restructuring as a means to facilitate fresh investments required to reignite production.
According to the president's statement, AHMSA carries a debt of up to MXN 5.0 billion ($290 million) owed to federal government agencies. However, the company's overall debt, as of September 2022, stands at $3.25 billion, with assets valued at $2.51 billion.
President Lopez Obrador believes that the offer presented to Ternium and ArcelorMittal serves as a "guarantee" for the Federal Electricity Commission and Pemex to continue supplying energy to AHMSA. It is worth noting that due to AHMSA's insolvency, the State companies had suspended electricity and gas supplies earlier this year, resulting in a halt in operations and delayed payment of workers' wages.
Unmentioned by the president is the involvement of US private capital management fund, Argentem Creek Partners, which had entered into an agreement in February to acquire a controlling stake in AHMSA, contingent upon fulfilling requirements to inject $200 million to reactivate steel production. These requirements, including the restructuring of AHMSA's debt to the federal government, have seemingly encountered roadblocks due to the upcoming presidential election process in 2024.
President Lopez Obrador shared that several companies had expressed interest in acquiring AHMSA, but the main shareholder, Alonso Ancira, had refused to sell. This case could refer to Julio Villareal, a businessman who previously sold the Sicartsa steel company to ArcelorMittal for over $1.4 billion in 2006.
Reports have suggested that Villacero, who is a friend of the president and supported his political campaign in 2018, backed Villareal's purchase of AHMSA. Additionally, Villareal is a creditor of AHMSA through the Afirme financial group, which he owns.
In a plea to Ancira, the president implored him to consider selling AHMSA, cautioning that legal battles would lead to the loss of the plant and the livelihoods of thousands of workers.
The region surrounding Monclova, Coahuila, where AHMSA is headquartered, teeters on the edge of a social crisis. With an integrated steel mill boasting an annual production capacity of 5.5 million metric tons of steel, the company provides direct and indirect employment to approximately 17,000 workers. As the tale unfolds, the fate of AHMSA hangs in the balance, holding the hopes and dreams of many in its resilient grasp.
Bron Steelguru (via email)