Esmark subsidiary levels charge against union related to Essar Steel bid

By Lisa Kerner

Charlotte, N.C., June 11 - Esmark Inc. subsidiary Wheeling-Pittsburgh Steel Corp. filed a charge under the National Labor Relations Act against the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Services Workers International Union (USW) alleging multiple violations of federal labor law in connection with the union's attempts to block the proposed acquisition of Esmark by Essar Steel Holdings Ltd.

Specifically, the suit alleges that USW officials said:

• The USW will not deal with Essar Steel or enter into an agreement with Essar Steel;

• The USW has the right to veto any proposed transaction between Esmark and Essar Steel under the successorship provision of its collective bargaining agreement; and

• Esmark must cease any proposed transaction with Essar Steel because the USW supports the purchase of the company by Russian steelmaker OAO Severstal.

"The collective bargaining agreement with the USW has provisions designed to protect employees by requiring a purchaser to recognize the USW and assume their labor agreement under certain circumstances," Esmark president Craig Bouchard said in an Esmark news release.

"The USW seeks to turn what was intended as a shield of employee protection into a sword to veto business transactions that lie within the proper province of the board of directors and shareholders of the company," Bouchard added.

Bouchard said Esmark does not believe that the successorship provisions of the collective bargaining agreement apply to the proposed Essar Steel transaction.

Essar Steel announced on Wednesday that as part of its increased offer for Esmark of $19 per share, it is prepared to recognize the United Steelworkers, assume the basic labor agreement and negotiate a new collective bargaining agreement on an expedited basis.

It was previously reported that while Essar Steel and Severstal both initially offered $17 per share for the Wheeling, W.Va., steel producer, the United Steelworkers supported the Severstal deal and rejected Essar Steel's offer.

Essar Steel is a flat carbon steel manufacturer based in Essar, India.

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