CHICAGO AK Steel gets edge in bid for National
The Ohio-based steelmaker has until March 17 to reach a bargaining agreement with the union representing National's workers.
CHICAGO (AP) -- A judge named AK Steel Corp. the lead bidder for bankrupt National Steel, a designation that would give it the edge if a bidding war erupts amid National's efforts to dig its way out of Chapter 11.
U.S. Bankruptcy Judge John H. Squires also set an April 7 hearing date on AK Steel's $925 million offer to purchase Mishawaka, Ind.-based National. AK Steel's priority status means it will be allowed to collect a "breakup" fee should National decide to sell its assets to another buyer.
National also has "the right to walk away" from AK Steel's offer should the Middletown, Ohio-based company fail to reach a new collective bargaining agreement with the union representing National employees, said Tim Pohl, a Chicago-based attorney representing National.
AK Steel's deadline for reaching such a deal is March 17 -- a date one union representative called "very, very hard to achieve."
"Six weeks is a very short time for such an agreement to be reached because the climate is not that good, " said Mike Farver, president of United Steelworkers of America Local 6103, which represents about 1,100 workers at Midwest Steel in Portage, Ind.
Midwest Steel is operated by National, which also owns Granite City Steel in southwestern Illinois.
Farver said union member sentiment toward AK Steel has been restrained because the company once allowed a lockout of 620 workers in Mansfield, Ohio, to persist for three years.
Last week, AK Steel sweetened its offer for National by adding $100 million. The revised bid came one week after it countered an offer by rival U.S. Steel Corp., which has proposed taking National Steel out of bankruptcy for $750 million and the assumption of $200 million in debt.
AK Steel's current proposal -- which retains its offer for the $200 million debt -- includes the purchase of National Steel Pellet Corp., a taconite mine in Keewatin, Minn.
AK Steel offered $825 million for National Steel on Jan. 23. That offer did not include the Keewatin mine.
U.S. Steel's offer
Pittsburgh-based U.S. Steel's offer does not include the mine, but the nation's largest steel producer has said it remains interested in acquiring National Steel. The company also expressed confidence in being able to reach a new labor agreement with the United Steelworkers.
In addition to the labor agreement, a number of conditions must be met for the sale to go through, including creditor and Bankruptcy Court approval.
National Steel has been operating under Chapter 11 bankruptcy protection since March. It filed for reorganization because of depressed steel prices, competition from imported steel and a weak overall U.S. economy.