Saturday, April 19, 2003

AK Steel bid now second-best

U.S. Steel favored to buy bankrupt National

By Mike Crissey
The Associated Press

PITTSBURGH - U.S. Steel has outbid AK Steel for bankrupt National Steel after U.S. Steel reached a labor agreement with the Steelworkers union and raised its bid.

Following a two-day auction in Chicago, National Steel's board of directors chose U.S. Steel late Thursday as the "highest and best" bidder for the Mishawaka, Ind.-based company, which has been under bankruptcy protection since March 2002.

Pittsburgh-based U.S Steel increased its bid for National by $75 million, to $850 million, plus the assumption of $200 million in debt.

"We are extremely pleased. All along, we have felt we are the best solution to the National bankruptcy problem and we are very pleased with the outcome," U.S. Steel spokesman John Armstrong said.

The decision must still be approved. A hearing is set for Monday before U.S. Bankruptcy Judge John H. Squires in Chicago.

The decision comes a week after Middletown-based AK Steel, which had been declared the lead bidder by a bankruptcy judge, failed to reach a labor agreement with United Steelworkers of America covering National's workers.

A National attorney said earlier that the company had "the right to walk away" from AK Steel's offer should the company fail to reach a new collective bargaining agreement with the union representing National employees.

AK Steel had bid $925 million for National, plus assuming $200 million in debt, and confirmed that it had not changed its offer.

AK Steel officials did not return calls seeking comment.

Last week, the union and U.S. Steel announced an agreement that would cover 22,000 workers at both National and U.S. Steel as well as 100,000 retirees.

As part of the deal, which would only be ratified if U.S. Steel takes over National, U.S. Steel has agreed not to sell off parts of its coke, iron ore and transportation assets, a move that would retain jobs for union members.

Negotiations for National Steel, which include new contracts with the Steelworkers, have touched on the union's long-standing feud with AK Steel.

The acrimonious relationship flared up last week after AK threatened to void workers' contracts rather than reach a new pact with the union.

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