Wheeling-Pittsburgh Comments on Scrap Supplier Lawsuits
06/19/2007 - Wheeling-Pittsburgh comments on an arbitration proceeding commenced by Herman Strauss, and a lawsuit filed by Metal Management, Inc.
Wheeling-Pittsburgh released a statement commenting on the arbitration proceeding commenced by Herman Strauss, Inc., and a lawsuit filed by Metal Management, Inc. (MMI).
The arbitration demand filed by Strauss arises out of Wheeling-Pittsburgh’s first-quarter 2007 termination of three agreements dated April 8, 2004, between Wheeling-Pitt and Strauss for the supply and processing of steel scrap by Strauss. The termination arose out of the failure to resolve several issues—including workplace safety practices, billing issues and other significant matters relating to Strauss’ non-performance under those agreements. Wheeling-Pittsburgh says its response to the arbitration demand will be filed shortly, at which time the company intends to assert substantial claims arising out of Strauss’ practices under the agreements.
MMI filed litigation in response to Wheeling-Pittsburgh’s June 4 written notification that—due to an unacceptable number of scrap quality deficiencies—it was rejecting and would accept no further deliveries of several grades of steel scrap. Wheeling-Pittsburgh says its June 4 notice of default was preceded by several weeks of efforts to cope with, and mitigate injuries arising out of, these steel scrap deficiencies.
Wheeling-Pittsburgh also advised MMI on June 4 that, subject to compliance with specifications, it would continue to accept delivery of, and make timely payment for, the two remaining scrap grades ordered by Wheeling-Pitt. To date, Wheeling-Pitt has made payments of over $25 million to MMI for steel scrap.
A significant portion of the claims asserted in MMI’s lawsuit are for scrap that was rejected as out-of-specification as well as amounts that are not yet due under existing contractual terms. Wheeling-Pittsburgh says it will file a responsive pleading in due course and intends to vigorously assert its claims relative to MMI’s failure to comply with scrap specifications.
The company notes that there can be no assurance as to the outcome of these actions or their effect on the financial condition or results of operation of Wheeling-Pittsburgh Corp.
Wheeling-Pittsburgh is a steel company engaged in the making, processing, and fabrication of steel and steel products using both integrated and electric arc furnace technology. The company manufactures and sells hot-rolled, cold-rolled, galvanized, pre-painted and tin millsheet products. The company also produces a variety of steel products including roll formed corrugated roofing, roof deck, floor deck, bridge form and other products used primarily by the construction, highway and agricultural markets. Wheeling-Pittsburgh Corp. is the holding company of Wheeling-Pittsburgh Steel Corp.
