U.S. OKs extension on sale of Point

May 19, 2007|By Allison Connolly | Allison Connolly,Sun reporter

Mittal Steel Co. NV has been granted another month to sell the Sparrows Point steel mill, the Justice Department disclosed yesterday.

The extension comes just days after chief executive Lakshmi N. Mittal said the Dutch steelmaker expected to conclude a deal within the next "six to eight weeks."

That timetable still puts Mittal past the new deadline of June 20, but the company could be granted another 30-day extension, a Justice Department spokeswoman said yesterday.

In February, antitrust regulators ordered Mittal to sell the Baltimore County steel mill within 90 days because its pending $33 billion merger with Arcelor SA, of Luxembourg, would likely hurt competition for tin mill products in the Eastern United States. The original deadline set by the Justice Department was tomorrow.

During a Web cast from Luxembourg Wednesday to discuss first-quarter earnings, Mittal said the company was making "good progress" on the sale. However, the company has been tight-lipped about who the bidders are, describing them as American and foreign steelmakers as well as private equity groups.

So far, Esmark Inc., of Chicago Heights, Ill., and CSN Brazil have publicly disclosed they have entered formal bids for the mill. Another Brazilian steel company, Usinas Siderurgicas de Minas Gerais SA, which is partially owned by Japanese steelmaker Nippon Steel Corp., also is reported to be interested in Sparrows Point.

Esmark President Craig T. Bouchard declined to comment yesterday in view of the sensitive nature of negotiations as Mittal whittles down the offers for Sparrows Point.

Steel analyst Charles Bradford, of Bradford Research Inc. in New York, believes the two Brazilian companies and two Russian companies, Severstal OAO and Evraz Group SA, are on the short list.

"If someone can't make money in steel right now, they should be ashamed of themselves," Bradford said.

He pointed out that earlier this month, IPSCO Inc., of Lisle, Ill., went to a surprise bidder - SSAB Svenskt Stal AB, of Stockholm, Sweden - for $7.7 billion, or $160 per share. That was a far cry from 2001, when IPSCO, the largest plate maker in North America, traded for less than $10 per share.

Bidding for IPSCO became frenzied in the final weeks leading up to the sale.

Bradford thinks Sparrows Point will fetch about $1 billion.

The complex is an integrated steel mill with deep-water access. Though it is more than 100 years old, longtime owner Bethlehem Steel Corp. invested hundreds of millions of dollars in upgrades, including building a new cold mill and relining its blast furnace - the largest in North America - before it filed for bankruptcy in 2001.

The plant employs fewer than 2,500 full-time employees and produces more than 3 million tons of steel per year.

The Brazilians could barge cheap iron ore from their mines in South America to Sparrows Point, Bradford said. For the Russian companies, Sparrows Point could be an entry point to the lucrative North American market, he said.

allison.connolly@baltsun.com

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