Mittal gains time on Dofasco

U.S. gives steelmaker until Jan. to sell 1 of 3 sites, including Point

November 30, 2006|By Allison Connolly | Allison Connolly,Sun reporter

Steelworkers at Sparrows Point will have to wait another two months to learn whether their Baltimore County plant or a sister mill in Weirton, W.Va., will be sold if their parent company cannot divest a Canadian subsidiary to settle antitrust issues.

Yesterday the Justice Department gave Netherlands-based Mittal Steel Co. NV another 60 days to try to sell Dofasco Inc., which is controlled by a Dutch foundation called a "stichting." Mittal must sell one of the three plants to avoid having a monopoly on tin production in the United States once its $33.5 billion merger with Luxembourg-based Arcelor SA is complete.

Mittal did not request the extension, said spokesman William Steers, a sign that the Justice Department is intent on Mittal selling Dofasco before Sparrows Point or the Weirton mill.

"It gives us more time to exhaust every option available to us in unraveling the stichting," Steers said yesterday. "Obviously, the Justice Department believes there's more we can do."

Mittal had a Tuesday deadline to sell Dofasco, a profitable unit that manufactures high-grade metal sheet for the auto industry. Arcelor bought Dofasco in January and transferred it to the Dutch foundation in an attempt to thwart Mittal's hostile takeover bid. Mittal had promised to sell Dofasco to German steelmaker ThyssenKrupp AG if its takeover was successful.

Despite agreeing to merge with Mittal in August, Arcelor has no control over Dofasco's fate. It is up to the independent foundation's three trustees to decide whether to release Dofasco for sale. Earlier this month the trustees - Allan Tuttle, a partner at Washington -based Patton Boggs LLP, former Arcelor board member Robert Hudry and former Arcelor legal affairs chief Federik Van Bladel - rejected a proposal by Mittal to sell Dofasco to ThyssenKrupp for $4.6 billion, less than the $4.86 billion price Arcelor paid.

If unable to sell Dofasco, Mittal officials, who prefer to sell the Weirton mill rather than Sparrows Point, said they had identified 10 potential buyers for the West Virginia plant. Less than two weeks ago, a Chicago-area steel distributor, Esmark Inc., said it was interested in Weirton if Esmark's deal to buy Wheeling-Pittsburgh Corp. is approved.

The Independent Steelworkers Union, which represents Weirton's 1,300 collective bargaining workers, has publicly supported a sale, with hopes that a new owner would restart the mill's steelmaking furnace and bring back about 1,000 workers laid off last year when Mittal took over.

"We've made it clear to DOJ that we want to be the one divested," union President Mark Glyptis said yesterday.

But it appears the Justice Department has not given up on Dofasco. The new deadline is Jan. 28, 2007, the government said in a court filing yesterday.

Steers declined to comment on what Mittal's next move might be.

Steel analyst Charles Bradford, of New York City-based Bradford Research Inc., said ThyssenKrupp could sue Arcelor Mittal in an attempt to force the foundation to relinquish Dofasco.

"The market for steel has noticeably weakened," he said, referring to falling steel prices and cutbacks steel companies - including Mittal - are making during the fourth quarter. "Maybe ThyssenKrupp would be paying too much."

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