New steel company forged
• Severstal finalizes purchase of EsmarkBy PAUL GIANNAMORE, For The Times Leader
Article Photos
WHEELING - Wheeling-Pittsburgh Steel Corp. underwent its second ownership change in less than a year Monday as Russian steelmaker OAO Severstal closed its tender offer for the common stock of Esmark Inc. at 10 a.m.
The steelmaker now will be known as Severstal Wheeling Inc. Esmark had completed an 18-month acquisition process to become Wheeling-Pitt's owner in November.
Ken Aspenleiter, president of United Steelworkers Local 1190, which includes workers at the Steubenville and Mingo Junction mills as well as the coke plant in Follansbee, said on looking back on Esmark's involvement with Wheeling-Pitt, "I'm a firm believer that everything happens for a reason. The downside is some of this is good, some of it is bad. One thing I know forever is that I've got the greatest bunch of guys and girls in the world down in that mill. You can say you are buying this asset or that asset or this mill or that mill, but what you really are buying are those people, who have shown time and time again that they'll never give up."
Wheeling-Pitt has been through two bankruptcies and multiple ownership structures since 1985.
Severstal's $1.25 billion deal included purchasing all outstanding Esmark shares at $19.25 a share, plus assumption of debt. Severstal also acquired Esmark's steel services group, to be known as Northern Steel Group Inc., as well as the remaining 50 percent of the joint venture Mountain State Carbon coke plant at Follansbee. Severstal and Wheeling-Pittsburgh, when it was still a stand-alone steelmaker, entered a joint venture to refurbish and operate the coke plant in late 2005.
Severstal placed the equity value of the purchase at $775 million. The deal also includes the assumption of about $400 million in Esmark debt, as well as $110 million in loans that were floated as interim capital by India's Essar Steel Holdings.
Esmark and Severstal issued statements indicating completion of the deal early Tuesday. Esmark's stock will cease to be publicly traded as Severstal takes the company private.
Neither company indicated the fate of the Esmark corporate headquarters in downtown Wheeling, though Severstal's North American corporate headquarters is in Dearborn, Mich., and Esmark was completing an office complex near Pittsburgh International Airport.
Severstal won a bidding war for Esmark over India's Essar Steel Holdings Ltd.
The USW, which had supported Severstal's acquisition of Wheeling-Pitt, has extended its contract with the steelmaker through Nov. 1. The contract was set to expire Sept. 1.
Aspenleiter said, "We look forward in the very near future to sitting down and actually having some dialogue with them."
Aspenleiter said part of the extension includes making any terms of a new contract retroactive to Sept. 1.
Gregory Mason, chief executive of Severstal International and chief operating officer of OAO Severstal, said, "The acquisition of Esmark represents a significant step in Severstal's North American growth strategy. Not only does the addition of Esmark bring considerable stand-alone growth potential while also creating synergies with our existing U.S. plants, it solidifies Severstal's position as one of the leading integrated steel companies in the fast consolidating North American market. We are now poised to be a leading producer and supplier of domestically produced steel to a region that has a consistent demand for high-quality products."
Jim Bouchard and other Wheeling-Pitt officials did not return calls for comment Tuesday.
The Russian steelmaker says it plans to spend $250 million on capital improvements on Wheeling-Pitt's Ohio Valley plants during the next five years.
Aspenleiter said Esmark had already scheduled an outage of the iron and steelmaking section of the plant in Mingo Junction to begin Friday and last 35 days. The outage was scheduled for major repairs and to address "concerns with the electric arc furnace, the BOF and the 80-inch" hot strip mill, Aspenleiter said.
He said he had not been told Tuesday that Severstal would change the plan for the outage.
"It's all things we wanted. After the outage is over, everything will be fine tuned and ready to go," he said. "As far as we know with Severstal taking over, the outage is still on."
Aspenleiter said Severstal seems ready to make the plant more successful.
"They seem committed to making this thing go," he commented.
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UNCOMMONSENSE
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08-06-08 9:50 AM
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I still remember when the biggest worry was that the Russians were gonna invade and begin to take over. Well looks like they finally did.
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