U.S. Steel Settles Dispute - Analyst Blog
13 Dicembre 2011 - 12:00PM
Zacks
Finally, U.S. Steel
Corp. (X) and the Canadian government reached a settlement
to end a court dispute over the company’s 2007 takeover of
steelmaker Stelco Inc.
Canadian government took
Pittsburgh-based U.S. Steel to court in 2009 under the country’s
foreign-takeover laws. According to the lawsuit filed, the company
broke its commitments to operate its Canadian facilities to the
“net benefit” of Canada as spelled out in U.S. Steel’s 2007
acquisition of Stelco. The government was upset when U.S. Steel
scaled back operations in 2009.
Further, U.S. Steel challenged
lawsuit, arguing that Ottawa's actions, such as introducing the
idea of a $10,000-a-day fine against the company, violated the
Charter of Rights and Freedoms. The case marked the first legal
challenge to the Investment Canada Act.
U.S. Steel agreed to maintain
operations in Canada until 2015 and make C$50 million ($48.7
million) in additional capital investments beyond the C$200 million
it originally promised.
Further, U. S. Steel also committed
to make financial contributions of $3 million toward community and
educational programs in Hamilton and Nanticoke, which will start
immediately. U. S. Steel will contribute $1 million by early
February 2012.
Going forward, this settlement
signifies that U. S. Steel will continue operations in Canada while
providing economic benefit to the communities of Hamilton and
Nanticoke.
U.S. Steel, the largest U.S.
steelmaker by volume, will continue to operate at the Lake Erie and
Hamilton plants in Ontario until 2015, according to the statement.
It will also contribute C$3 million toward community and education
programs in Hamilton and Nanticoke.
In October 2011, U. S. Steel
reported third-quarter 2011 adjusted net income of $118 million or
72 cents per share, exceeding the Zacks Consensus Estimate of 55
cents per share.
The net income excluded $96 million
or 57 cents per share of net foreign currency losses, primarily
related to the accounting re-measurement of the inter company
loans. Including this, net income came in at $22 million, or 15
cents per diluted share versus net loss of $51 million or loss of
35 cents per diluted share.
U.S. Steel competes with
international steel giants like ArcelorMittal
(MT), BaoSteel, Posco (PKX),
Nippon Steel and
ThyssenKrupp.
We maintain our Neutral
recommendation on United Steel with its quantitative Zacks #3 Rank
(short-term Hold rating).
ARCELOR MITTAL (MT): Free Stock Analysis Report
POSCO-ADR (PKX): Free Stock Analysis Report
UTD STATES STL (X): Free Stock Analysis Report
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