Enron Industrial Markets announced Monday it has signed a 15-year risk management and procurement outsourcing agreement with steel processor Huntco Inc. Under the contract, Enron will provide inventory price risk management services and will eventually provide more than 600,000 tons per year of hot-rolled, cold-rolled and galvanized steel products to Huntco Steel, a subsidiary of Huntco Inc.

Under the agreement, Enron will be provided access to Huntco’s network of steel distribution centers. The contracts also provide for Enron’s acquisition of Huntco’s cold rolling and certain coil pickling operations in Blytheville, AR, and the extension of a term loan from Enron to Huntco under transactions totaling $27 million.

“These transactions with Huntco have the potential to fundamentally change the way steel is bought and sold in the United States. It gives Enron immediate access to physical steel and positions Enron geographically to serve the steel industry in a variety of ways,” said Jeff McMahon, CEO of Enron Industrial Markets. “In addition to providing physical products on both a spot and term basis, our goals for the steel industry include developing commodity risk management products, providing structured finance products and establishing the market-making capabilities that Enron has brought to the natural gas, power and other commodity markets.”

Enron entered the steel industry when it began offering financial steel swaps in November 2000. Today, EnronOnline provides physical products and risk management services to both buyers and sellers of steel products.

All of the Huntco transactions are scheduled to close on or before June 30, subject to satisfactory completion of Enron’s due diligence and obtaining applicable consents and approvals. Financial terms were not disclosed.

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