CHICAGO - AK Steel Holding Corp. won a bankruptcy judge's designation as lead bidder for the assets of National Steel Corp., a week after offering to pay $1.13 billion.
U.S. Bankruptcy Judge John Squires' decision means that any competitor would have to top the offer by $17 million, including a $15 million breakup payment to AK Steel, at an April 1 auction.
The offer, which exceeded a competing bid by U.S. Steel Corp., requires AK Steel to negotiate a collective-bargaining agreement with the United Steelworkers of America by March 17.
'A lot of work to do'
"AK Steel has a lot of work to do with the union," said Timothy Pohl of Skadden, Arps, Slate, Meagher & Flom, an attorney for National Steel.
The purchase would allow AK Steel, the biggest U.S. maker of automotive steel, to more than double its production capacity. National Steel, which filed for Chapter 11 protection in March, is among more than 30 U.S. steelmakers that have filed bankruptcy papers since 1997, when financial crises in Asia and Russia lowered the price of imported steel.
Mishawaka, Ind.-based National Steel makes hot-rolled and cold-rolled steel used in auto production, building construction, pipes and tubing.
National Steel said last week that it had agreed to sell most of its assets, including the National Steel Pellet Co. in Keewatin, Minn., to AK Steel for $925 million in cash and $200 million in liabilities.
Middletown, Ohio-based AK Steel had increased its cash offer by $100 million from a Jan. 23 proposal, and added the pellet company to the package.
U.S. Steel, North America's biggest maker of raw steel, offered about $950 million Jan. 9, including $200 million in liabilities and as much as $100 million of common stock. Its offer didn't include acquiring the pellet company.
U.S. Steel said last week that winning the contest to become lead bidder, the so-called stalking horse, wasn't essential to the bankruptcy auction. Squires set a sale hearing date of April 7, four business days after the auction.
"We remain interested in acquiring the assets of National Steel at the right price and with the right labor agreement," U.S. Steel's chief executive officer, Thomas Usher, said last week in a statement.
"We are confident we can achieve such an agreement."
No U.S. Steel representatives spoke at yesterday's court hearing in Chicago.
AK Steel's shares slipped a penny to $5.98 yesterday; National Steel rose half a cent to 11 cents; and U.S. Steel gained 6 cents to $12.25.