Celsa and Strategic Value Partners Secure €600 Million in Key Refinancing Deal

Celsa, recognized as one of Europe’s leading green long steel producers, has recently finalized a significant refinancing effort valued at €600 million. This development comes as part of a broader initiative to strengthen its financial positioning and operational capabilities. The transaction, co-led by Strategic Value Partners, LLC (SVP) and its affiliates, included the issuance of these HoldCo PIK notes alongside a more extensive set of senior secured bonds amounting to €1.2 billion. Specific terms regarding the transaction were not disclosed, but the implications of this deal set a strong foundation for Celsa's ongoing growth and competitiveness in the steel industry.

Celsa’s operations, extending across Spain, France, and Poland, leverage Electric Arc Furnace (EAF) technology. This innovative production method allows for a remarkable 94% of materials used in Celsa’s processes to be recycled, promoting a waste recovery rate of 98%. Such a commitment to sustainability not only elevates Celsa’s environmental responsibilities but also positions the company favorably within a market increasingly focused on reducing carbon footprints. Indeed, Celsa's operations emit approximately 20% of the CO2 compared to traditional steel production methods, which could yield a substantial competitive advantage as EU regulations tighten post-January 1, 2026.

Jordi Cazorla, the CEO of Celsa Group, emphasized the significance of completing this refinancing as a crowning achievement in the ongoing transformation that began in 2023. He stated, “We are entering a favorable environment and are now able to capitalize on the positive market and expected regulatory developments in the near term.” The support from shareholders and financing partners has proven crucial during this transformation, which has included a financial restructuring initiated by SVP in 2022, leading to Celsa emerging as a more robust entity capable of sustaining growth.

In the two years since SVP's involvement, Celsa has seen radical improvements under new management, with an investment exceeding €900 million in equity devoted to realizing a comprehensive value-creation plan alongside the successful refinancing of their operations. Álvaro Fabián, Managing Director of SVP's European Investment Team, expressed satisfaction regarding the partnership, stating, “We have been proud to be a strong partner with Jordi and his team … The business is now well positioned to take advantage of significant tailwinds in the coming years.”

Celsa has reported impressive sales of €3.352 billion and an Adjusted EBITDA of €451 million over the past twelve months, employing around 5,232 individuals. The firm anticipates that several factors will enhance its financial performance, notably through detailed execution of their value-creation plan, which aims to streamline costs and increase revenue.

Recent announcements from the European Union indicate a proposal to reduce steel import quotas by 47% and to double tariffs from 25% to 50% once quotas are exceeded. Such measures are forecasted to boost utilization rates among EU producers and could positively affect steel margins significantly. Coupled with this, Celsa's principal market—construction—holds a promising forecast, expected to see growth of 3.4% in Spain and 5.2% in Poland from 2024 to 2027. Given that construction comprises 85% of Celsa's end sales, these market conditions are anticipated to further solidify the company's financial footing.

In conclusion, the collaboration between Celsa and SVP not only marks a vital milestone in ensuring the company’s financial stability but also emphasizes a greater commitment to sustainability and operational efficiency. With the stages set for future growth, Celsa is on track to navigate and thrive amidst the evolving European industrial landscape.