The $1.35 billion deal to purchase the Sparrows Point steel mill has fallen apart, the plant?s owner announced Monday morning, one week after a self-imposed deadline between the two parties involved passed.
Plant owner ArcelorMittal said in a release it had terminated the deal at the direction of a court-appointed trustee due to buyer and international investment group E2 Acquisition Corp.?s “inability to secure financing.”
Illinois-based Esmark led the international group, and president Craig Bouchard said the company would assemble a new group of backers and re-bid for the plant.
“We?ve been encouraged by the United Steelworkers and the trustee to stay involved,” he said.
The two parties were set to close the deal Nov. 30, but Bouchard said ongoing issues between the United Steelworkers union and ArcelorMittal over payment of retired workers? health benefits led them to extend the date to Dec. 11. Bouchard said financing agreements between the buying parties had lapsed Nov. 30, but said at the time that the partners remained committed to the deal.
“Everyone was scheduled for a Nov. 30 closure date. Anything that happened beyond that date would have required a new approval,” he said.
ArcelorMittal said the trustee, Washington, D.C., lawyer Joseph Krauss, intends to retain an investment bank to assist him in the sale process. The company said no specific schedule has been established but that Krauss? goal is to complete the sale at “the earliest possible closing date.”
Krauss said he was appointed after the E2/Mittal deal was struck, and would have intended to use an investment bank from the start.
ArcelorMittal was required by the U.S. Department of Justice to divest the plant after it acquired a competitor, and reached an agreement with E2 in August.
Bouchard and United Steelworkers spokesman Gary Hubbard said negotiations centered on payment of health care benefits for the plants retired workers. Hubbard said that group totaled about 84,000 people, including between 20,000 and 25,000 in the Baltimore area, who have pension benefits guaranteed by the federal government, but not health care.
The union must sign off on any sale of the plant, Hubbard said.
