Corus has had its best year ever. The Anglo-Dutch steel maker that was formed by the merger of British Steel and Koninklijke Hoogovens in 1999 turned a £225m loss in 2003 into a pre-tax profit of £559m in 2004.
The successful turnaround of a company that was once on the brink of collapse has been helped largely by higher steel prices on the back of booming Chinese demand. But the ambitious plans introduced by Corus chief executive officer (CEO) Philippe Varin, who joined in 2003, have also helped the company to move into the black by slashing £220m of costs.
The French CEO’s three-year initiative, ‘Restoring Success’, introduced a number of measures to help Corus restore profitability and reduce its debt, including restructuring the company’s UK business into three core operations at Port Talbot, Scunthorpe and Rotherham.
Director of legal affairs Richard Shoylekov, who joined a year ago, is also contributing to this strategy by consolidating Corus’s legal resources, monitoring quality control and controlling costs.
He has also introduced various initiatives to raise the legal department’s profile. “We have increased our availability and strengthened communications internally and with our other offices’ legal departments, for example the Netherlands and Belgium,” says Shoylekov. “As a result, confidence in us has increased and more work has come in.”
As part of this process, Shoylekov has hired two lawyers specialising in competition and M&A, to reflect the mix of work in the department – acquisitions and disposals, regulatory compliance and support to commercial operations. “With only six lawyers in London, in a company with 48,500 employees, we need to expand,” explains Shoylekov.
Before Shoylekov’s initiative, the legal function had a fairly low profile at Corus. Now at least once a month, the team don their hard hats and visit a project site to enable the lawyers to give more practical advice.
“There was a perception that the department was responsive rather than proactive, to be called when there was a problem,” says Shoylekov. “We are trying to develop a broader risk-management programme. We want to assist the people who procure materials, negotiate and manage supply contracts. The aim is to provide guidance before disputes arise.”
Shoylekov recently concluded a review of Corus’s external lawyers to streamline the quality and depth of the company’s relationships with existing advisers and to identify new firms.
“We want to establish and manage long-term relationships [with external lawyers], and having been on both sides I know how important this is,” explains Shoylekov.
Corus has a longstanding relationship with Slaughter and May, dating back to the company’s formation. Corporate finance partner Gary Ebourne advised the company on the restructure of its £549m facility, provided by a consortium of banks including HSBC, ABN Amro, Credit Suisse First Boston and ING. This latest deal replaced the existing debt put in place in July 2003, when Slaughters advised Corus on the arrangement of a £824m facility.
Norton Rose, a more recent addition to Corus’s legal roster, advised on a deal with Teesside Cast Products, involving the supply of slab from Corus’s Teesside plant to a consortium of companies. Shoylekov notes that the company “achieved its objective of adding value to the original supply contract”.
Meanwhile, Teresa Hitchcock at DLA Piper Rudnick Gray Cary handles specialist areas such as health and safety and environmental law. Lovells, which has also advised Corus on corporate work, has been retained on the legal roster.
Corus’s immediate priority is to close the competitive gap with its European peers. Consequently, it has finally admitted its interest in acquiring the Turkish government’s 46 per cent stake in Turkish steel company Erdemir. Corus is currently pitching – with Norton Rose advising – for this deal against a number of rival bidders, including Arcelor, Mittal and possibly US Steel.
Corus produces products for the construction industry, the automotive and white goods industries and the aerospace, engineering and aviation industries. On the upstream side, it has supply arrangements with raw material suppliers in iron ore, coal and coke, which are vital to steel-making.
“As well as being a product supplier, we are trying to be more service-orientated and offer overall packages and solutions, to add value,” says Shoylekov.
Shoylekov is about to become company secretary and general counsel as well as director of legal affairs. As a result he is involved in corporate governance issues, risk management programmes and revamping the competition compliance programme.
“We want to ensure the policy is understood in every jurisdiction and people know what to do if there is a dawn raid, for example. I want to use this as a model for broader awareness-raising and training in other areas,” he says.
Shoylekov started his career at Freshfields Bruckhaus Deringer. His first move was to British Gas Exploration and Production, and he has spent most of his career in the upstream oil and gas industry. He had a short spell at Watson Farley & Williams before joining Italian oil company Agip as the head of legal and business development and commercial manager in the UK before being promoted to global general counsel in Milan.
Shoylekov has undergone a baptism of fire since joining Corus. But his team’s contribution is helping the once embattled company to restore success.
Director of legal affairs
|Annual legal spend||£10m|
|Director of legal affairs||Richard Shoylekov|
|Reporting to||Chief executive officer Philippe Varin|
|Main law firms||DLA Piper Rudnick Gray Cary, Lovells, Norton Rose and Slaughter and May|