Heat Treat Industry News
May 16, 2008
FORMER OWNER OF STEEL PLANT FILES LAWSUIT - Mittal claims bidder lacked enough money
The now former owners of the Sparrows Point steel mill, ArcelorMittal, filed a lawsuit against one of the original bidders for the plant, the Luxembourg-based company announced last Thursday, according to a company press release.
ArcelorMittal filed a civil suit against Esmark Inc. and its subsidiary, E2 Acquisition Corp., in the New York Supreme Court and is seeking in excess of $540 million for what it claims was a breach of trust by Esmark/E2 in its Aug. 1 contract to purchase the Sparrows Point steel manufacturing facility from Mittal for $1.35 billion, the release said.
The contract between the two steel companies was terminated on Dec.16, after Cleveland-based Esmark/E2 failed to complete the transaction, according to the release.
The plant, which Mittal had bought from the International Steel Group in 2005, was officially sold to Russia-based OAS Severstal for $810 million on May 7, the release said.
Esmark has yet to receive or review the lawsuit, in light of the circumstances surrounding the termination of the Sparrows Point sale agreement with E2 Acquisition Corp., said a release from Esmark on Friday.
The company was surprised at the news, according to the Esmark release, and called the suit “frivolous.”
Esmark accused Mittal of failing to meet various conditions that were required to close the transaction, including failing to resolve outstanding disputes it had with the United Steelworkers of America pertaining to the proposed sale and failing to obtain the required consent of the union as admitted in Esmark’s Nov. 14 earnings release, which stated that the Sparrows Point transaction was “still pending approval of the United Steelworkers,” the Esmark release said.
Esmark plans to pursue any claims it has against ArcelorMittal, according to the release.
Esmark put in a bid for the former Bethlehem Steel plant when the U.S. Department of Justice ordered Mittal to sell it in September to prevent a tin plate monopoly.
Neither company returned calls about the suit earlier this week.
by Joseph M. Giordano
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