Severstal offers to replace Essar Steel financing to acquire Esmark

By Lisa Kerner

Charlotte, N.C., June 19 - OAO Severstal reiterated its continued interest in acquiring Esmark, Inc. in a $17-per-share tender offer.

Severstal said it is prepared to immediately replace the financing from Essar Steel Holdings Ltd. to satisfy the company's obligations if the arbitrator in the United Steelworkers' right to bid grievance arbitration with Esmark sets aside Esmark's memorandum of agreement with Essar Steel.

The offer was made in a June 19 letter to Esmark chairman and chief executive officer James Bouchard.

In April, Essar Steel agreed to acquire Esmark for $17 per share, or $670 million, and extended a $110 million loan to Esmark to address a potential default, according to a prior news release.

Like Essar Steel, Severstal offered $17 per share for the Wheeling, W.Va., steel producer. However, its offer had the backing of the USW, which rejected Essar Steel's offer, a prior news release said.

On June 11, Esmark subsidiary Wheeling-Pittsburgh Steel Corp. filed a charge under the National Labor Relations Act against the USW alleging multiple violations of federal labor law in connection with the union's attempts to block the proposed acquisition of Esmark by Essar Steel.

The USW denied the claims.

Essar Steel then increased its offer for Esmark to $19 per share and said it was prepared to recognize the USW, assume the basic labor agreement and negotiate a new collective bargaining agreement on an expedited basis.

Severstal is a Moscow-based metals and mining company.

Essar Steel is a flat carbon steel manufacturer based in Essar, India.

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