YOUNGSTOWN Texas company renews bid to buy North Star Steel
Lone Star wants North Star to drop a lawsuit it filed when the first deal fell through last year.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
YOUNGSTOWN -- The Texas company that tried unsuccessfully to buy North Star Steel's plants in Youngstown and Houston last December is making another attempt.
Lone Star Technologies of Dallas, a producer of steel pipes and tubes for the oil and electric industries, offered to pay $430 million for North Star's Tubular Products Division last summer. The deal fell through because Lone Star said it couldn't find financing.
The company filed a report this week with the federal Securities and Exchange Commission, announcing that it has made another bid for the two tube plants. The amount of the offer was not stated.
Lone Star's SEC filing reported that North Star and its parent company, Cargill Inc., are soliciting offers for the tubular division from other potential bidders.
If it is the successful bidder, Lone Star said, company officials are considering offering shares of Lone Star common stock in a public offering to raise funds to buy North Star's Tubular Products Division.
The company said it would also use borrowed funds under its credit agreement, other debt financing and cash on hand to pay for the North Star facilities.
Cargill and North Star filed a breech of contract lawsuit against Lone Star when it pulled out of the purchase deal in December, seeking unspecified damages.
About earlier try
Cargill had said that Lone Star would be required to pay $10 million if the deal was not completed to compensate Cargill for taking the plants off the market.
Lone Star stated in its SEC report that the company believes it performed all its obligations under the original agreement and will contest the lawsuit vigorously.
If Lone Star becomes the new owner of North Star's tubular division, the report says, it will expect the lawsuit to be dismissed.
North Star's Tubular Division makes seamless pipe used to line the shafts of oil wells, especially those used for deep underwater drilling. The mill has about 425 employees and, at full staff, also provides employment for about 140 contract workers.
Cargill, based in Minneapolis, Minn., has said it wants to sell the tubular division as part of an effort to get out of the steel business and concentrate on its primary businesses: agriculture feed and food processing.
A North Star spokesman at the company's headquarters and the plant manager in Youngstown could not be reached.
In explaining why its purchase deal fell through last year, Lone Star attributed the problem to the effects of the Sept. 11 terrorist attacks on financial markets and the economy in general.