Houston — Big River Steel CEO Dave Stickler told S&P Global Platts in an interview he has "doubled down" on his investment in the company after US Steel acquired a minority stake earlier in October.
The $700 million transaction gave US Steel a 49.9% stake in Big River Steel with a call option to acquire the remaining stake within the next four years.
The move by US Steel "reshuffled" Big River's ownership ranks, according to Stickler.
Koch Minerals and TPG Furnace LP both reduced their ownership stakes in Big River Steel.
"The investors that sold got a 300% return on the money that they took off the table to allow room for US Steel to come in," according to Stickler.
However, Stickler's Global Principal Partners did not cash out any of his investment. "My firm did not take one dollar of money out of this transaction. So I doubled down ... Some of my partners in my firm Global Principal Partners said 'Dave, 300% return that's pretty good return.' I said I think the future is even brighter," Stickler told Platts.
"If I thought for one minute that the involvement of US Steel in our company was going to hinder our ability to be successful in the future, I would have taken some of my money off the table. But I doubled down," added Stickler.
The deal leaves plenty of room of flexibility for the different partners. Stickler said there were still a lot of interesting scenarios that can play out over the next four years. "There are various mechanisms where US Steel has a call [option]. There is a put mechanism, where the remaining 50.1% could put their ownership back to US Steel. There are ways US Steel could be bought out or we could decide to remain 50.1% and 49.9% partners," said Stickler.
Still, the transaction starts with US Steel's call option. "The transaction provides US Steel with a call option to acquire, over a four-year period, the remaining 50.1% of the company. Whether they ultimately acquire the 50.1% or not remains to be seen. They have clearly indicated a desire to do so but a lot can happen over a four-year period," added Stickler.
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