ArcelorMittal Terminates Sparrows Point Purchase Agreement with E2
12/17/2007 - ArcelorMittal terminates agreement for the sale of its Sparrows Point facility and related assets to E2 Acquisition Corp., a joint venture sponsored by Esmark and Wheeling-Pittsburgh.
ArcelorMittal has terminated its agreement with E2 Acquisition Corp. for the sale of ArcelorMittal USA’s Sparrows Point facility and related assets to E2. ArcelorMittal was directed to terminate the purchase agreement by the court-appointed trustee who has the authority to affect the divestiture of Sparrows Point.
Sparrows Point is a fully integrated steelmaking facility located near Baltimore, Md., that is capable of producing 3.9 million tons of raw steel annually. Products include hot-rolled sheet, cold-rolled sheet, galvanized sheet, Galvalume, tin mill products, and semi-finished steel. Markets served include construction, steel service centers, automotive, container, and appliance.
ArcelorMittal’s divestiture of Sparrows Point is the result of an agreement between the company and the Department of Justice (DOJ), pursuant to a court-ordered consent decree. The agreement is an outcome of Mittal Steel NV’s merger with Arcelor SA. Mittal said that it will continue to work closely with the DOJ and the court-appointed trustee to satisfy the terms of the consent decree.
E2—a joint venture sponsored by Esmark Inc. and Wheeling-Pittsburgh Corp.—had originally announced execution of the definitive Sparrows Point purchase agreement on August 2, 2007. As defined in that purchase agreement, the sale of Sparrows Point to E2 was to close on November 30, 2007. Although ArcelorMittal agreed on November 29, 2007, to extend the closing to December 11, 2007, E2 was still unable to secure the necessary financing.
With overall responsibility (on behalf of the DOJ) to affect the divestiture of the Sparrows Point plant, the trustee, Joseph Krauss of Hogan & Hartson LLP, said that he intends to retain an investment bank to assist him in the sale process. Although no specific schedule has been established, the trustee’s goal is to obtain a transaction with the earliest possible closing date.
ArcelorMittal will continue to operate the plant during the divestiture process, consistent with its obligations under its agreements with the DOJ. ArcelorMittal remains committed to maintaining strong relationships with the facility’s customers and suppliers throughout the sale process.
ArcelorMittal is the world's largest steel company, with 320,000 employees in more than 60 countries. The company leads a number of major global markets, including automotive, construction, household appliances and packaging, with leading R&D and technology, as well as sizeable captive supplies of raw materials and outstanding distribution networks. An industrial presence in 27 European, Asian, African and American countries exposes the company to all the key steel markets, from emerging to mature, positions it will be looking to develop in the high-growth Chinese and Indian markets.
ArcelorMittal’s key pro forma financials for 2006 show combined revenues of USD 88.6 billion, with a crude steel production of 118 million tonnes, representing around 10% of world steel output.
