USW Reiterates Support for Severstal’s Purchase of Esmark
05/22/2008 - The United Steelworkers reconfirms its strong support for OAO Severstal's proposal to acquire all outstanding shares of Esmark common stock.
The United Steelworkers (USW) has reconfirmed the union’s strong support for OAO Severstal's proposal to acquire all outstanding shares of Esmark Inc. common stock.
The USW reiterated its opposition to Essar Steel Holdings Limited's effort to purchase the company, confirming that it would exercise its full rights under the current labor contract to prevent the transaction between Esmark and Essar.
Under the current contract’s Successorship Clause, Esmark and Essar cannot close the proposed transaction until Essar has entered into a collective bargaining agreement with the USW. The union is making it clear that it will not enter into such an agreement.
The USW also said it will hold Esmark accountable for breaching the legal protections granted by its contractual Right to Bid Clause by entering into the memorandum and closing on related financing without first providing the Steelworkers with appropriate notice and an opportunity to bring forward an alternative proposal.
“Although the USW did have some discussions with Essar, they came very late in the process and those discussions did not result in an understanding regarding a Successor Labor Agreement. Despite knowing this, Esmark signed an agreement with Essar without providing the USW with the opportunity to put forward an alternative proposal under explicit provisions of the Right to Bid clause," said USW District 1 Director David McCall.
“Our objections to the Essar deal are based on both our obligation to vigorously defend our contractual rights as well as the fact that Severstal has agreed to a contract that meets the needs of our members and our retirees.’
