E2 finance woes kill deal for ArcelorMittal facility

Dec 17, 2007 | 02:15 PM | Scott Robertson

The inability of E2 Acquisition Corp. to settle financing issues has scuttled its deal to buy ArcelorMittal SA's Sparrows Point, Md., mill. The failure sets the stage for new bidders to vie for the mill and throws into question what Wheeling-Pittsburgh Steel Corp. will do to secure slab supplies.

But E2 plans to try again.

ArcelorMittal, which has been attempting to sell the mill under an edict from the U.S. Justice Department, ended talks with E2 late Sunday, saying it terminated its agreement when E2 was unable to secure financing.

The financing fell apart when one of E2's partners, Ukraine's Industrial Union of Donbass, reportedly backed out of an agreement to provide a large portion of the financing for the $1.35-billion deal, sources told AMM. Donbass withdrew its support when it became clear how much of Sparrows Point's slab production would be going to Wheeling-Pittsburgh, the sources said.

E2 was formed by a consortium of Donbass, Brazil's Cia. Vale do Rio Doce (now Vale), Chicago-based Esmark Inc. and other investors to buy Sparrows Point. The plan of Craig and Jim Bouchard, the brothers who head E2 and Wheeling-Pittsburgh, respectively, was to marry the steel production of Wheeling-Pittsburgh and Sparrows Point with the service center operations of Esmark.....