ArcelorMittal files suit against Esmark / E2 over failed Sparrows Point sale
10 May 2008
Luxembourg: The world's largest steelmaker ArcelorMittal said yesterday that that it filed suit against Esmark Inc, E2 Acquisition Corporation (Esmark / E2) in the Supreme Court of the State of New York, for their failure to complete the contracted buy out of the former Mittal Steel plant at Sparrows Point in the US.
ArcelorMittal is seeking over $540 million in connection with Esmark / E2's breach of its 1 August 2007 contract to purchase the Sparrows Point steel manufacturing facility from ArcelorMittal for $1.35 billion. US anti-trust authorities had earlier in the year asked ArcelorMittal to divest the plant as a condition for granting regulatory approval for Mittal Steel's $35-billion merger with Luxembourg-based steelmaker Arcelor SA.
Esmark, a Chicago-based metals distributor, had formed E2 with Brazil's Cia Vale do Rio Doce and Ukraine's Industrial Union of Donbass to buy the Sparrows Point plant for $1.35 billion. The mill is on a deepwater port and can produce about 3.9 million tonnes of raw steel year.
ArcelorMittal had, on 1 August announced a deal to sell the plant to E2 Acquisition Corp, with a deadline set for 30 November which was later extended to 11 December.
The sale had to be terminated as the group failed to arrange funds by the 11 December deadline.
That contract was terminated on the direction of a court-appointed trustee on 16 December 2007, after Esmark/E2 failed to come up with the money required to complete the transaction and Arcelor Mittal finally sold Sparrows Point to OAO Severstal, its Mittal Steel's rival in the takeover of Arcelor SA, for $810 million, net of debt, on 7 May 2008.
