Wednesday, March 26, 2003

AK wins time to deal, but stock loses value

By Mike Boyer
The Cincinnati Enquirer

The judge overseeing National Steel Corp.'s bankruptcy extended the bidding process for two weeks Tuesday, giving AK Steel and United States Steel more time to negotiate a critical labor agreement.

AK Steel's shares fell 17 percent Tuesday when two investment firms lowered their opinion of the Middletown steel company's stock after it disclosed that it expects to report a loss in the current quarter because of lower shipments and higher costs.

AK's shares closed at $3.72, down 75 cents on the day.

In its annual report filed Friday, the company - which has made a $1.1 billion bid for National Steel - said first-quarter shipments will slip to 1.35 million tons from 1.43 million tons in the fourth quarter of last year, mainly because of lower demand from contract customers in the appliance, construction and manufacturing markets.

Morgan Stanley analyst Wayne Atwell said the first-quarter loss could jeopardize AK's ability to finance the National deal.

The bankruptcy court extension, sought by National Steel on Monday, pushes the deadline for AK Steel to negotiate a labor agreement with the United Steelworkers of America from today to April 9. U.S. Steel, which is negotiating separately with the union, has until April 10 to resubmit its bid.

The auction for National's assets, which had been set for April 2, has been pushed back to April 16. A hearing to confirm the bidding before Judge John Squires has been moved from April 7 to April 21.

A spokeswoman for the Mishawaka, Ind., steel maker, which has been under court protection for a year, said the extension would give all parties more time to negotiate.

But Leo Gerard, Steelworkers president, objected to the extension. The union was upset that both bidders had been contacted to arrange a delay but it was not.

Alan McCoy, AK Steel spokesman, said his company didn't request the delay and didn't oppose it.


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