Jun 10 2008
Essar Steel Holdings Limited, a part of the multi-billion dollar Essar Global Limited, a diversified business conglomerate with interests in the sectors of Steel, Energy, Power, Shipping & Logistics, Telecommunications, Mining & Minerals, and Construction, today informed the Esmark Board of Directors that it was ready to consider a potential increase to its April 30, 2008, offer to acquire Esmark Inc. at USD 17 per share. Essar also said that it would consider making an increased bid after it had obtained additional information from Esmark.
Essar, on the invitation of Esmark and UBS, the firm’s financial advisors, participated in a bidding process for the sale of Esmark shares. After following all legal procedures and a transparent bid process, Essar’s offer was unanimously accepted by the Esmark Board.
Following Esmark’s acceptance of Essar’s offer on April 30, 2008, Essar entered into a memorandum of agreement with Esmark to acquire Esmark Inc. at an estimated enterprise value of USD 1.1 billion which includes a proposed tender offer for a cash purchase price of USD 17 per share of all outstanding shares of the Nasdaq listed steel company.
Simultaneously, at Esmark’s request, Essar also immediately extended a USD 110 million loan to Esmark, which helped the company address a potential default. As part of the acquisition strategy, Essar has also proposed a capital expenditure program of USD 525 million for Esmark’s Ohio and West Virginia manufacturing facilities over the next five years.
In a letter sent today to the Esmark Board of Directors, Essar specifically sought information on “any arrangements or understanding” that Severstal may have had with Franklin Mutual Advisers, LLC, an institutional shareholder of Esmark, who Essar understands has agreed to tender their shares into the Severstal offer. ESHL also urged the Board to “recognize its continuing obligations under the Memorandum of Agreement, dated April 30, 2008, and in particular Esmark’s agreement to enter into the Merger Agreement upon the expiration of the Right to Bid period provided in Article Eleven, Section D of the CBA.”