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ENRON CAPITAL & TRADE RESOURCES ANNOUNCES INTEGRATED FINANCE AND SUPPLY AGREEMENT WITH QUALITECH STEEL
FOR IMMEDIATE RELEASE: Monday, July 29, 1996
HOUSTON -- Enron Capital & Trade Resources (ECT), a subsidiary of Enron Corp., announced today that it completed an integrated capital financing and energy supply contract with newly-formed Qualitech Steel Corporation (Qualitech).
Under the terms of the agreement, ECT invested $34 million -- $14 million in equity and $20 million in subordinated debt -- toward the development and construction of a technologically-advanced steel minimill in Indianapolis, Indiana, and an iron carbide production facility in Corpus Christi, Texas.
ECT will supply natural gas to both locations, as well as provide energy price risk management services. In addition, ECT has the option to provide electricity to the steel minimill via a "buy through" arrangement negotiated with the local utility.
Iron carbide is a leading substitute for steel scrap that is being used by minimills in the steel making process. High quality steel scrap is in short supply and is becoming more expensive. Iron carbide enjoys a significant cost advantage as compared to high quality scrap, and the demand for iron carbide is expected to grow significantly in the next few years, both in the U.S. and worldwide. Iron carbide represents a substantial growth market for natural gas.
"This is a first-of-its-kind transaction," said Jeffrey K. Skilling, chairman and chief executive officer of ECT. "Never before has ECT combined capital financing with the delivery of an energy commodity within the industrial sector. This transaction illustrates the types of integrated solutions we can provide to energy-intensive industrial customers."
"ECT serves as a true energy partner to our company," said Gordon Geiger, chairman and chief executive officer of Qualitech. "Through our relationship with ECT, Qualitech is uniquely positioned both domestically and internationally for competitive growth in both the scrap substitute and the special bar quality steel industry."
Enron Corp., one of the world's largest integrated natural gas companies with approximately $13 billion in assets, operates the largest natural gas transmission system in the Western Hemisphere and the second largest system in the world; is the largest purchaser and marketer of natural gas and the largest non-regulated marketer of electricity in North America; produces and markets natural gas liquids worldwide; owns 59 percent of Enron Oil & Gas Company, one of the largest independent (non-integrated) exploration and production companies in the United States; owns 59 percent of Enron Global Power & Pipelines L.L.C., which is owner and manager of operating power plants and natural gas pipelines around the world; and is one of the largest independent developers and producers of electricity in the world. Enron Corp. is traded under the ticker symbol, "ENE."
For additional information please contact:
Diane Bazelides
713-853-6285
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