Russel Metals & Marubeni-Itochu to Merge OCTG & Line Pipe Business
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Russel Metals & Marubeni-Itochu to Merge OCTG & Line Pipe Business

Russel Metals Inc has entered into an agreement with Marubeni-Itochu Tubulars America Inc, whereby Russel Metals and MITI will combine their

Russel Metals Inc has entered into an agreement with Marubeni-Itochu Tubulars America Inc, whereby Russel Metals and MITI will combine their respective Canadian OCTG & line pipe businesses. In conjunction with the combination, Russel Metals will receive a substantial portion of its contributed net asset value in cash proceeds, in addition to retaining a 50% equity interest in the combined venture. Currently, Russel Metals operates its Canadian OCTG & line pipe business through its wholly owned subsidiary Triumph Tubular & Supply Ltd and MITI operates its Canadian OCTG & line pipe business through its wholly owned subsidiary Hallmark Tubulars Ltd. The combined business of Triumph and Hallmark will operate under a newly incorporated company, named TriMark Tubulars Ltd.

Over the past several years, the macro business conditions for the OCTG& line pipe industry have changed substantially as a result of a challenging energy market as well as the disintermediation of distributors by certain direct-to-market manufacturers. As a result, this combination will create a business that has the necessary economies of scale, including a diverse product offering and business platform to efficiently and effectively serve its customers.

A CAD 175 million committed bank facility for TriMark has been obtained from a syndicate of banks, jointly led by the Royal Bank of Canada and Bank of Montreal. The facility is a 3-year asset based loan with typical borrowing base parameters and financial covenants. The bank facility is non-recourse to Russel Metals and MITI.

The transaction is subject to customary regulatory and closing conditions and is expected to close in the second or third quarter of 2021.

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