Union blames E2 allies, Mittal

USW says Point owners took too long to start serious talks in deal

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

With the dust barely settled on E2 Acquisition Corp.'s $1.35 billion failed bid to buy the Sparrows Point steel mill, the United Steelworkers are pointing fingers at owner ArcelorMittal and E2's strategic partners for causing the deal's collapse.

In a letter to members, Steelworkers Negotiation Committee Chairman David McCall and John Cirri, president of Local 9477, which represents workers at Sparrows Point, said ArcelorMittal waited too long to begin serious bargaining over union benefits. By that time, the letter said, strategic partners of Esmark Inc., which was leading the effort, "reneged on their agreement to merge Wheeling-Pitt and Sparrows Point."

The union officials said the partners "backed away from the deal because they could not control the company."

ArcelorMittal agreed in August to sell Sparrows Point to a joint venture led by Chicago Heights, Ill.-based Esmark Inc. to comply with a Justice Department order. Its partners were Companhia Vale do Rio Doce of Brazil, Industrial Union of Donbass Corp., a Ukrainian steel company, and Franklin Mutual Advisers.

ArcelorMittal terminated the purchase agreement this week, saying E2 lacked the necessary financing and had missed deadlines to complete the deal.

A court-appointed trustee overseeing the sale is in the process of hiring an investment bank to find a new buyer.

The Steelworkers officials said the union "will continue to insert itself into this bidding and buying process."

"We are confident that ArcelorMittal now understands its obligation to engage in good faith affects bargaining early on in the next process," the letter said.

McCall and Cirri also said the union backed Esmark's plan for profitable Sparrows Point to supply 850,000 tons of steel slab a year to twice-bankrupt Wheeling-Pittsburgh Corp., which would increase production of finished product in hopes of attracting new customers and improving its bottom line.

"As part of the purchase agreement, Sparrows Point eventually would be merged with Wheeling-Pitt/Esmark to form one very strong company," the letter said.

"Merging Sparrows Point and Wheeling-Pitt made sense because the business plan would enable both to run at maximum capacity and be a viable company," McCall and Cirri said.

Craig T. Bouchard, E2 chairman and chief executive officer, has vowed to come back to the table with a new bid. He declined Monday to name any new partners until he makes an official bid.

Yesterday, Vale announced it has cut ties with the investment group. The Brazilian company, which has one of the largest iron ore mines, had committed $270 million to the deal.

When the E2 deal was announced in August, Vale had said it might build an iron-ore pellet plant or coking-import facility at Sparrows Point. Iron ore is used to make steel.


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