U.S. Steel in Talks to Buy National Steel From NKK
USX-U.S. Steel Corp. is in talks to buy rival Japanese steelmaker NKK Corp.’s National Steel Corp., the two companies said Sunday, as the U.S. industry fights to survive what it terms an onslaught of cheap imported steel.
Pittsburgh-based U.S. Steel and rival domestic steelmaker Bethlehem Steel Corp., issued a proposal Dec. 4, calling for consolidation within the struggling U.S. steel industry and help from the U.S. government.
The proposal was spurred by what domestic steelmakers said are excessive imports of steel at cheap prices, which create a particularly tough market amid paltry demand.
In a move toward consolidation, U.S. Steel said it was in talks to buy National Steel, but added that a deal would depend on “a number of significant conditions.”
National Steel, the Mishawaka, Ind.-based U.S. subsidiary of NKK, would have to undergo a “substantial restructuring” of its debt, U.S. Steel said.
National Steel posted a net loss of $152.8 million for the third quarter, and the company said borrowings under all credit facilities totaled $368 million as of Sept. 30.
NKK said it supports consolidation as a solution to the U.S. steel industry’s structural problems, and said it felt a “sense of crisis which requires immediate attention,” according to a statement posted on its Web site.
In a statement issued Sunday, U.S. Steel again asked for a U.S. government plan to address “the excessive imports of steel that have been depressing markets in the United States.”
The company requested a government-sponsored program to help fund employee pension and retiree health-care costs, which it said were the “most significant barrier” to domestic steel industry consolidation.
The U.S. International Trade Commission on Friday recommended that President Bush give up to four years of import relief to U.S. steel companies, which could include tariffs of up to 40% on some products.
Other domestic steelmakers are resisting such a plan, which they have called a government bailout of failed companies within the fragmented industry.
Bethlehem Steel, which filed for bankruptcy protection in October, has said it was involved in merger discussions. Sources familiar with the talks said LTV Corp. and WHX Corp.’s Wheeling-Pittsburgh Steel also might take part. LTV filed for Chapter 11 bankruptcy protection last December.
