Esmark adopts stockholder rights plan, declares dividend

By Lisa Kerner

Charlotte, N.C., June 13 - Esmark Inc.'s board of directors adopted a stockholders rights agreement that the company said is designed to help stockholders receive the highest value for their shares in connection with the sale of Esmark.

The board also declared a dividend of one preferred share purchase right for each outstanding share of Esmark common stock, payable on June 13 to the stockholders of record at the close of business on June 13, an Esmark news release said.

Each right will allow its holder to purchase one one-hundredth of a share of series A junior participating preferred stock for $60 once the rights become exercisable.

According to Esmark, the rights become exercisable if a person becomes an "acquiring person" by acquiring 15% or more of the Esmark common stock.

The plan does not apply to existing stockholders who own 15% or more of Esmark's existing common stock, unless they acquire additional shares in an amount equal to or greater than 0.25% of Esmark's outstanding common stock.

Esmark noted that the agreement will not apply to a tender offer or other acquisition proposal made by the United Steelworkers under the right to bid provisions of the collective bargaining agreement, a tender offer recommended by Esmark, or a tender offer that is not consummated until 21 business days after certain conditions relating to the collective bargaining agreement with the United Steelworkers have been satisfied for all pending acquisition proposals.

"We believe the adoption of the stockholders rights agreement will level the playing field among bidders and help maximize shareholder value as we move forward with the current process to sell the company," Esmark chairman and chief executive officer James P. Bouchard said in the release.

The United Steelworkers recently denied claims by Esmark that the union violated federal labor law in regard to discussions the union has had with Essar Steel Holdings, Ltd. and OAO Severstal, both of which are bidding for Esmark.

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.

Essar Steel said as part of its increased offer for Esmark of $19 per share, it is prepared to recognize the United Steelworkers, assume the basic labor agreement and negotiate a new collective bargaining agreement on an expedited basis.

It was previously reported that while Essar Steel and Severstal both initially offered $17 per share for the Wheeling, W.Va., steel producer, the USW supported the Severstal deal and rejected Essar Steel's offer.

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

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