WCI Steel shareholders file lawsuit to stop sale

By Don Shilling

The Warren steelmaker said the legal challenge is without merit.

WARREN — A legal fight has developed over the sale of WCI Steel.

Minority shareholders in the Warren steelmaker have filed a lawsuit to try to stop the sale of the company to OAO Severstal, a Russian-based company.

WCI issued a statement Wednesday that says the lawsuit is without merit.

“We intend to vigorously defend against this baseless action and will continue to pursue an expeditious closing of the sale, which will significantly improve the long-term prospects of the Warren facility,” WCI said.

It noted the lawsuit was filed by shareholders who represent less than 18 percent of the company’s outstanding shares. A majority of shareholders approved the sale last month.

Bloomberg news service reported Tuesday the minority investors include CVI GVF (Lux) Master S.a.R.L. of Luxembourg, Eagle Rock Master Fund LP of the Cayman Islands and Wilfrid Aubrey International Ltd. of Bermuda.

Bloomberg said the suit, which was filed in a court in Delaware, contends that the WCI board of directors should have accepted a $172 million offer from Optima International of Miami Inc. but were swayed by a steelworkers’ union to favor the Severstal deal.

Severstal offered to pay $3.29 a share, which amounts to $139.8 million. It also agreed to assume $230 million in debt.

Bette Kovach, WCI public affairs manager, said the company wasn’t commenting beyond its release, which said the Severstal deal provides the most value to WCI stockholders, customers, suppliers and employees.

Severstal told union officials it intends to invest millions of dollars in scheduled maintenance and upgrades to the mill.

Optima International officials could not be reached to comment Wednesday. Business listings indicate the company produces tire and wheel parts and has Ukrainian ownership.

WCI said last month that it expected the sale to Severstal would be completed this coming fall. The deal needs antitrust clearance from the U.S. Department of Justice.

Severstal has been expanding its presence in the U.S. by acquiring mills in Michigan and Maryland and opening a new mill in Mississippi. The company’s worldwide operations have annual revenues of $15 billion.

WCI, which has about 1,200 employees, emerged from bankruptcy court protection in 2006 under the ownership of its former bondholders. Its largest shareholder is New York investment fund Harbinger Capital Partners Master Fund I Ltd.

shilling@vindy.com