Two days after a self-imposed deadline for completion of the $1.35 billion sale of the Sparrows Mill steel plant, its owner said the deal was still on and that it was conferring with a court-appointed trustee on its status.
“In cooperation with the court-appointed trustee overseeing the sale process, the Purchase Agreement has not been terminated at this time,” Mittal Steel Co. NV spokesman William Steers said in a statement. “The Company is in communication with the [Department of Justice?s] trustee and is determining its next steps in cooperation with the DOJ and the trustee.”
At issue in the negotiations is a fund the steelworkers union has requested to secure health care for the plant?s retired workers, according to Charles Bradford,a steel industry expert with New York-based Soleil Securities. While the workers? pensions are guaranteed by the federal government, their health care is not, he said.
“The union has wanted a fund to be set aside to guarantee the health plans, not the pension plans, of retired workers,” Bradford said. “The union has wanted the parties to set aside money for that.”
Bradford said he wasn?t aware whether the union wanted contributions from both parties, or in what amount. Neither the United Steelworkers? Washington offices nor its Local 9477 offices returned calls for comment Wednesday.
Chicago-based steel distributor Esmark, which leads an international group seeking to acquire the plant, also did not return calls for comment Wednesday. On Tuesday, spokesman Bill Keegan said the company would “watch the proceedings” and decline comment “for the foreseeable future.”
Steers said Mittal would continue to operate the plant during negotiations with E2 Acquisitions Corp., a multinational investment firm formed to buy the plant. Washington antitrust lawyer Joseph Krauss said Tuesday he has the authority to find a new buyer for the plant if that deal falls through.
“If the sale is not consummated with E2, the trustee will seek a new buyer for Sparrows Point and ArcelorMittal will fully cooperate with this process,” Steers said in his statement. “While the divestiture process continues, ArcelorMittal will continue to operate the plant consistent with its obligations under its agreements with the DOJ.”
Bradford said another buyer could be found ? Brazilian steelmaker CSN was also a finalist during the bidding process, and other international firms had expressed interest.
“There had been other people that I had heard were interested … but at a lower price probably,” he said. “I had put a value in my own mind of below $1 billion.”
