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Steelworkers Skeptical About $1.35 Billion Deal

Esmark's purchase of Maryland's Sparrows Point mill was announced Aug. 2 and has yet to close, leaving some union members to question their support of the deal.

BALTIMORE (AP) โ€” A United Steelworkers official said he was encouraged but still skeptical after meeting Wednesday with the leader of the group that plans to buy the Sparrows Point steel mill.
The closing of the $1.35 billion deal was announced Aug. 2 is taking longer than expected, prompting the union local representing the plant's approximately 2,500 workers to ask international union leaders this week to reconsider their support for the deal.
John Cirri, president of USW Local 9477, said he met for about three hours with Craig T. Bouchard, co-founder of Chicago Heights, Ill.-based steel distributor Esmark Inc. and chairman of E2 Acquisition Corp., the international investment group that was formed to buy Sparrows Point from Mittal Steel Co. NV, of the Netherlands.
Cirri said Bouchard was forthcoming about reasons for the delay and E2's plans but the union official declined to disclose details of their conversation.
''We're trying to work it all out,'' Cirri said. ''Right now, nothing has changed until we complete our discussions.''
Bouchard said in an e-mail that he hoped the meeting would help foster the local's trust in E2.
''We addressed very well most questions. Time will answer the rest,'' Bouchard wrote.
The U.S. Justice Department ordered Mittal in February to sell Sparrows Point to preserve competition in the market for tin-plated steel as part of Mittal's planned $41 billion acquisition of Arcelor SA of Luxembourg to create the world's largest steelmaker, ArcelorMittal. The deal was initially expected to close by Oct. 31, but Bouchard told The (Baltimore) Sun this week that it won't close before Nov. 30 because of its complexity.
On Tuesday, The Sun reported that Cirri had sent a formal letter to the international United Steelworkers body asking it to reconsider its support for the sale.
Cirri told The Sun that he and his members have been ''left in the dark'' over the transaction. He also expressed concern about E2's strategy for Sparrows Point, making it the main supplier of slab steel to the twice-bankrupt Wheeling-Pittsburgh Corp. in West Virginia, which Esmark is in the process of buying.
''Maybe this sale isn't the best thing for Sparrows Point,'' Cirri said Tuesday.
Gary Hubbard, a spokesman for the United Steelworkers, confirmed on Tuesday that the international in Pittsburgh had received an e-mail from Cirri. But Hubbard said he couldn't comment on it, citing confidentiality agreements related to the continuing negotiations over the sale.
The USW still could block the sale because of a clause in their contract with Mittal. The Justice Department also must approve the final terms.
Privately held Esmark and Wheeling-Pittsburgh Corp. are the lead partners in E2. The others are Industrial Union of Donbass Corp., a Ukrainian holding company; and Companhia Vale do Rio Doce, a Brazilian mining company also known as CVRD.
Separately Wednesday, ArcelorMittal reported a third-quarter profit of $3 billion, citing high steel prices and increased sales to new markets.
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