Justice Dept. OKs sale of Sparrows Point

BUSINESS DIGEST

April 16, 2008|By Andrea K. Walker | Andrea K. Walker,SUN REPORTER

The Department of Justice approved yesterday the sale of the Sparrows Point steel plant to Russian steelmaker OAO Severstal.

"The division has granted its approval to the Trustee's proposed sale of Sparrows Point to Severstal," Gina Talamona, a spokeswoman for the department, said in a statement.

Severstal announced last month that it had agreed to buy the 119-year-old Baltimore County plant, which employs 2,500, for $810 million in cash. The government-ordered sale was overseen by a trustee appointed by the U.S. Department of Justice.

The company plans to close on the sale in the next month.

"Severstal is working diligently to close the deal in the second quarter," said Michael Henson, a spokesman for the company.

Severstal must also get approval from the Committee on Foreign Investment in the United States.

The Justice Department ordered Luxembourg-based ArcelorMittal, the world's largest steelmaker, to sell Sparrows Point because of antitrust concerns over the production of tin plate, which is used to make cans, among other things.

A deal to sell the plant to a joint venture led by Esmark Inc. of Illinois for $1.3 billion failed in December because the buyer was not able to secure financing and a labor agreement.

Assuming the sale closes, Severstal will be the fourth owner of Sparrows Point in five years. The plant was owned by the now-defunct Bethlehem Steel Corp. for 87 years before it was taken over by International Steel Group in 2003. ISG sold to Mittal in 2005.

Severstal officials, some of whom visited Sparrows Point last week, say they plan to increase production at the plant to full capacity of 3.6 million tons a year. Mittal has used it as a swing plant, with output fluctuating with market forces.

Severstal has said it sees the Sparrows Point acquisition as key to helping it expand its footprint in the United States. The company said it would complement its other U.S. properties, which include the former Rouge Steel plant in Dearborn, Mich., and SeverCorr in Columbia, Miss.

The company expects Sparrows Point to add to its earnings this year, with synergies with its other U.S. operations saving at least $50 million a year.

andrea.walker@baltsun.com

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