U. S. Steel Announces Sale of Transtar, LLC to Fortress for $640 Million

by David Fleschen

United States Steel Corporation (NYSE: X) (“U. S. Steel” or the "Company") announced today that it has agreed to sell Transtar, LLC to an affiliate of Fortress Transportation and Infrastructure Investors LLC (NYSE: FTAI) (“FTAI”) for $640 Million. The transaction is expected to close in the third quarter of 2021, subject to customary closing conditions including receipt of certain regulatory approvals.

Upon completion of the sale, U. S. Steel will recognize key strategic benefits from the transaction, including:

  • Further align U. S. Steel’s operating focus on its core mining and steelmaking business under its Best for All℠ strategy.
  • A new financial structure which will unlock immediate incremental value for U. S. Steel stockholders by monetizing a non-core asset. U. S. Steel plans to use the proceeds of the sale to further strengthen its balance sheet, including deleveraging.
  • An initial 15-year contract to maintain the existing operations at the six operating railroads that make up Transtar®: the Gary Railway Company in Indiana; the Lake Terminal Railroad Company in Ohio; Union Railroad Company, LLC in Pennsylvania; Fairfield Southern Company, Inc. in Alabama; Delray Connecting Railroad Company in Michigan; and the Texas & Northern Railroad Company in Texas.

“By selling Transtar to an experienced railroad operator, U. S. Steel can better focus on our broader Best for All strategy,” said U. S. Steel President and Chief Executive Officer David B. Burritt. “By monetizing our railroad assets at an implied multiple well above our existing valuation, we create immediate value for our stockholders. In addition, the strong partnership we have created with FTAI will ensure continued support of our steelmaking facilities with predictable and cost-effective railroad operations.”

Citi acted as U. S. Steel’s exclusive financial advisor on the transaction. Jones Day and Baker & Miller PLLC acted as U. S. Steel’s legal advisors on the transaction.

Source: US Steel, Photo: Fotolia

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