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Item
1.
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Security
and Issuer.
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This
Statement on Schedule 13D (this “Statement”) relates to the common stock, par
value $0.01 per share (the “Shares”) of Esmark Incorporated, a Delaware
corporation (the “Company”). The Company’s principal executive
offices are located at 1134 Market Street, Wheeling, WV 26003.
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Item
2.
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Identity
and Background.
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The
person listed in number 1 below is the person filing this
Statement.
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1.
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Essar
Steel Holdings Limited
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(a) Essar
Steel Holdings Limited (“Parent”) is a company formed under the laws of the
Republic of Mauritius and is 100% owned by Essar Global Limited, a Cayman
Islands Company. Essar Global Limited is majority owned by the Ruia
family.
(b) The
address of the principal office of Parent is 10, Frere Felix, de Valois Street,
Port Louis, Republic of Mauritius.
(c) Parent’s
principal business is the development, manufacture and marketing of flat carbon
steel, from iron ore to ready-to-market products.
(d) During
the past five years, Parent has not been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) During
the past five years, to the Knowledge of Parent, Parent has not been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Parent is
a “Reporting Person” and is referred to in this Statement as the “Reporting
Person.”
Set forth
on Schedule A to this Statement, and incorporated herein by reference, is the
(a) name, (b) residence or business address, (c) present principal occupation or
employment, and (d) citizenship, of each executive officer and director of
the Reporting Person, and (e) name of any corporation or other organization
in which such occupation or employment is conducted, together with the principal
business and address of any such corporation or organization other than the
Reporting Person, as the case may be, for which such information is set
forth.
During
the last five years, to the best of the Reporting Person’s knowledge, none of
the persons named on Schedule A to this Statement, (a) has been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or (b) has been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
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Item
3.
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Source
and Amount of Funds or Other
Considerations.
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The total
amount of funds required by Parent to purchase the Shares (as described below)
is $37,500,000.00. The Shares are issuable upon conversion of up to
$37,500,000 principal amount of the loans outstanding under the Amended WPSC
Facility and the ESSG Facility (as defined and described
below). Parent funded such loans from internal working capital and
cash on hand.
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Item
4.
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Purpose
of Transaction.
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On April
30, 2008, Parent entered into a Memorandum of Agreement (the “MOA”) with the
Company pursuant to which, immediately upon the earlier of the expiration of the
time period (which the Company estimates to be approximately 52 days) provided
in Article Eleven, Section D of the collective bargaining agreement between
Wheeling-Pittsburgh Corporation, Wheeling-Pittsburgh Steel Corporation and the
United Steelworkers of America, AFL-CIO-CLC (the “USW”), dated August 1, 2003
(the “CBA”) or receipt by the Company of written waiver thereof from the USW
(such period being the “Solicitation Period”), the Company and Parent agreed to
enter into an Agreement and Plan of Merger (the “Merger Agreement”) in the form
attached to the MOA. The Merger Agreement provides for a tender offer
and merger pursuant to which, among other things, Essar Steel North American
Acquisition Inc. (“Purchaser”), an indirect wholly-owned subsidiary of Parent,
would acquire all of the outstanding Shares for $17.00 per share (the
“Offer”). Parent entered into the MOA and intends to enter into the
Merger Agreement in order to acquire control of, and ultimately the entire
equity interest in, the Company.
The
Merger Agreement provides, among other things, that as promptly as practicable
after the purchase of the Shares pursuant to the Offer and satisfaction or, if
permissible, waiver of the other conditions set forth in the Merger Agreement
and in accordance with the relevant provisions of the General Corporation Law of
the State of Delaware (“Delaware Law”), Purchaser will be merged with and into
the Company (the “Merger”). As a result of the Merger, the Company
will be the successor or the surviving corporation in the merger (the “Surviving
Corporation”) and will become an indirect wholly-owned subsidiary of
Parent. At the effective time of the Merger (the “Effective Time”),
each Share issued and outstanding immediately prior to the Effective Time (other
than Shares held in the treasury of the Company or Shares owned by Parent, the
Purchaser or any other successor or wholly-owned subsidiary of Parent and other
than Shares held by stockholders who have demanded and perfected appraisal
rights under Delaware Law) will be converted into the right to receive $17.00 in
cash, or any higher price that may be paid per Share in the Offer, without
interest (the “Merger Consideration”).
The
Merger Agreement provides that, promptly upon the acceptance for payment and
payment for the amount of any Shares by the Purchaser pursuant to the Offer,
Parent will be entitled to elect such number of directors, rounded up to the
next whole number, on the board of directors of the Company (the “Board”) as is
the product of the total number of directors on the Board (giving effect to the
directors elected pursuant to this section) multiplied by the percentage that
the
aggregate number of Shares beneficially owned by the Purchaser, Parent or any of
their affiliates bears to the total number of Shares then outstanding (on a
fully diluted basis) provided that those individuals designated or elected by
the USW to serve on the Board pursuant to the terms of the CBA will count as
directors designated by Parent for purposes of the foregoing
calculation. Subject to compliance with Section 14(f) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 14f-1
promulgated thereunder, the Company has agreed, upon Parent’s request, to use
reasonable best efforts to either promptly increase the size of the Board, or
promptly secure the resignations of such member of its incumbent directors, or
both, as necessary to enable Parent’s designees to be so elected or designated
to the Board, and will take all actions necessary to cause Parent’s designees to
be so elected or designated at such time. At such time, the Company
will, upon Parent’s request, also cause persons elected or designated by Parent
to constitute the same percentage (rounded up to the next whole number) as is on
the Board of each committee of the Board.
The
Merger Agreement provides that the Company will grant to Parent and Purchaser an
irrevocable option (the “Top-Up Option”) to purchase from the Company up to that
number of newly issued Shares (the “Top-Up Option Shares”) equal to the number
of Shares that, when added to the Shares owned by Parent and Purchaser
immediately following consummation of the Offer, shall constitute one share more
than 90% of the Shares outstanding on a fully diluted basis (after giving effect
to the issuance of the Top-Up Option Shares) for consideration per Top-Up Option
Share equal to $17.00. The Top-Up Option is exercisable only after
the purchase of and payment for Shares pursuant to the Offer as a result of
which Parent and Purchaser own beneficially at least 85% of the
Shares.
Concurrently
with entering into the MOA, Parent entered into a binding commitment letter with
the Company (the “Commitment”) to provide certain term loans to subsidiaries of
the Company in the aggregate amount of $110 million. Pursuant to the
Commitment, Parent entered into (i) a Term Loan Agreement, dated as of May 2,
2008, with the Company, Esmark Steel Service Group, Inc. and the other Loan
Parties party thereto (the “ESSG Facility”), and (ii) the Amended and Restated
Term Loan Agreement, dated as of May 5, 2008, with Wheeling-Pittsburgh
Corporation, Wheeling-Pittsburgh Steel Corporation (the “Amended WPSC
Facility”). Under the ESSG Facility and the Amended WPSC Facility,
Parent has a right exercisable in connection with a Change of Control (as
defined below) of the Company, or earlier with the consent of the Company, to
convert up to an aggregate of $37.5 million principal amount of outstanding
indebtedness into 3,000,000 Shares at a price of $12.50 per Share.
“Change
of Control” is defined as the occurrence of any of the following: (a) the
Company shall cease to own 100% of the voting interests in Wheeling-Pittsburgh
Company (“WPC”) or Esmark Steel Service Group; or (b) any person or two or more
persons acting in concert other than Franklin Mutual Advisers LLC shall have
acquired beneficial ownership (within the meaning of 13d-3 of the Securities and
Exchange Commission under Securities Act of 1934), directly or indirectly, of
voting interests of the Company (or other securities convertible into such
voting interests) representing 20% or more of the combined voting power of all
voting interest of the Company; or (c) any person or two or more persons acting
in concert other than Franklin Mutual Advisers LLC shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation, will result in its or their acquisition of control over
voting interests of the Company (or other securities convertible into such
voting interests)
representing
20% or more of the combined voting power of all voting interests of the Company;
or (d) WPC shall cease to own 100% of the equity interests in
Wheeling-Pittsburgh Steel Corporation; or (e) the Company or any of its
subsidiaries disposes of property in a single or series of dispositions (other
than dispositions permitted under the Amended WPSC Facility or the ESSG
Facility) valued in the aggregate in excess of 5% of the total book value of the
assets of the Company and its subsidiaries; provided that the execution and
delivery and consummation of the transaction contemplated by the Merger
Agreement will not constitute a “Change of Control”).
The loans
under the ESSG Facility bear interest at the three-month LIBOR rate plus
0.5% per annum payable quarterly and can be prepaid at any time and must be
paid in the event of a change of control of the Company not involving
Parent. In the event of a Change of Control not involving Parent, the
interest rate will retroactively increase by an additional 6.0% per annum from
May 2, 2008 in addition to the interest rate thereon plus customary LIBOR
breakage costs.
On a
Change of Control not involving Parent, or earlier with the consent of the
Company, Parent will have the right to purchase up to three million Shares
(minus the number of Shares, if any, converted under the WPSC Facility) at a
price of $12.50 per Share, instead of repayment of the corresponding amounts
under the ESSG Facility. Any amount of the loan converted into Shares
is not subject to the interest payments otherwise payable on a Change of
Control.
The
interest rate on loans under the Amended WPSC Facility was reduced from LIBOR
plus 1.00% to LIBOR plus 0.50%. The loans are payable quarterly and
can be prepaid at any time and must be paid in the event of a Change of Control
of the Company not involving Parent. In the event of a Change of
Control not involving Parent, the interest rate shall retroactively increase by
an additional 6.0% per annum from May 6, 2008 in addition to the interest rate
thereon plus customary LIBOR breakage costs.
On a
Change of Control not involving Parent, or earlier with the consent of the
Company, Parent will have the right to purchase up to three million Shares
(minus the number of Shares, if any, converted under the ESSG Facility) at a
price of $12.50 per Share, instead of repayment of the corresponding amount of
the loan. Any amount of the loan converted into Shares is not subject
to the interest payments otherwise payable on a Change of Control.
Parent
intends to cause the delisting of the Shares by Nasdaq as soon as possible after
consummation of the Offer. Purchaser currently intends to seek to
cause the Company to terminate the registration of the Shares under the Exchange
Act as soon after consummation of the Offer as the requirements for termination
are met. Such termination will substantially reduce the information
required to be furnished by the Company to holders of shares and to the
Securities and Exchange Commission under the Exchange Act.
References to and descriptions of the
MOA, the Merger Agreement, the ESSG Facility and the Amended WPSC Facility as
set forth in this Item 4 are qualified in their entirety by reference to the
MOA, the Merger Agreement, the ESSG Facility and the Amended WPSC Facility,
which are attached as exhibits to this Statement and incorporated by reference
in this Item 4.
Other
than as set forth in this Statement, the Reporting Person has no present plans
or proposals which relate to or would result in:
(a) the
acquisition by any person of additional securities of the Company, or the
disposition of securities of the Company;
(b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries;
(c) a
sale or transfer of a material amount of assets of the Company or of any of its
subsidiaries;
(d) any
change in the present board of directors or management of the Company, including
any plans or proposals to change the number or term of directors or to fill any
existing vacancies on the board;
(e) any
material change in the present capitalization or dividend policy of the Company;
(f) any
other material change in the Company’s business or corporate structure;
(g) changes
in the Company’s charter, bylaws or instruments corresponding thereto or other
actions which may impede the acquisition of control of the Company by any
person;
(h) a
class of securities of the Company being delisted from a national securities
exchange or ceasing to be authorized to be quoted in an inter-dealer quotation
system of a registered national securities association;
(i) a
class of equity securities of the Company becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Act; or
(j) any
action similar to any of those enumerated above.
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Item
5.
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Interest
in Securities of the Issuer.
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Parent
may be deemed to be the beneficial owner of up to 3,000,000 Shares issuable upon
exercise by Parent of the conversion rights granted in connection with the
Amended WPSC Facility and the ESSG Facility. Such conversion rights
become exercisable upon a Change of Control which could occur within 60
days as a result of the commencement on May 30, 2008, by OAO Severstal of a
tender offer for all of the outstanding Shares of the Company.
For
purposes of Rule 13d-3 under the Exchange Act, as a result of entering into the
ESSG Facility and the Amended WPSC, the Reporting Person may be deemed to
possess sole power to vote, or direct the vote of, and shared power to dispose
of, or direct the disposition of, 3,000,000 Shares representing approximately
7.1% of the outstanding Shares. The calculation of the
foregoing
percentage is based on 39,506,720 Shares as outstanding as of May 13,
2008 as disclosed by the Company in its annual report on Form 10-K
for the period ended December 31, 2007, and filed with the Securities and
Exchange Commission on May 20, 2008.
Except as
disclosed in Item 5(a), none of the Reporting Persons nor, to the best of their
knowledge, any of the persons listed on Schedules A to this Statement
beneficially owns any Shares or has the right to acquire any
Shares. The filing of this Statement shall not be deemed an admission
by the Reporting Person that they are, for purposes of Section 13(d) of the
Exchange Act, beneficial owners of Shares owned by other parties.
(c) -
(d)
Except as
described herein, none of the Reporting Persons nor, to the best of their
knowledge, any of the persons listed in Schedule A attached hereto, has acquired
or disposed of any Shares during the past 60 days. Furthermore, the
Reporting Person does not know of any other person with the right to receive or
the power to direct the receipt of dividends from, or the proceeds from the sale
of, the securities covered by this Statement.
(e)
Not
applicable.
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Item
6.
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Contracts,
Arrangements, Understandings or Relationships with Respect to Securities
of the Issuer.
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The
responses to Items 3, 4 and 5 regarding the MOA, the Merger Agreement, the
Amended WPSC Facility and the ESSG Facility are incorporated herein by
reference.
The
foregoing summary of the terms of the MOA, the Merger Agreement, the Amended
WPSC Facility and the ESSG Facility are qualified in their entirety by reference
to the full text of such agreements, copies of which are attached as Exhibits 1,
2, 3 and 4 to this Statement and are incorporated herein by
reference.
Except as
described above or elsewhere in this Statement or incorporated by reference in
this Statement, there are no contracts, arrangements, understandings or
relationships (legal or otherwise) among the Reporting Person and any other
person or, to the best of the Reporting Person’s knowledge, among any of the
persons named in Schedule A or between any such persons and any other person,
with respect to any securities of the Company, including, but not limited to,
transfer or voting of any securities, finder’s fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits, division of profits
or losses, or the giving or withholding of proxies.
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Item
7.
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Materials
to be Filed as Exhibits.
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Exhibit
No.
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1.
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Memorandum
of Agreement, dated as of April 30, between Essar
Steel Holdings
Limited and Esmark Incorporated (incorporated by reference to Exhibit 10.1
to Esmark Incorporated Current Report on Form 8-K/A filed with the
Securities and Exchange Commission on May 22, 2008)
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2.
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Agreement
and Plan of Merger among Essar Steel Holdings Limited, the entity
designated therein as Purchaser and Esmark Incorporated (incorporated by
reference to Exhibit 99.2 to Esmark Incorporated Current Report on Form
8-K/A filed with the Securities and Exchange Commission on May 22,
2008)
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3.
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Term
Loan Agreement, dated as of May 2, 2008, among Esmark Incorporated, Esmark
Steel Service Group, Inc., the other Loan Parties party thereto, the
Lenders party thereto and Essar Steel Holdings Limited (incorporated by
reference to Exhibit 10.1 to Esmark Incorporated Current Report on Form
8-K filed with the Securities and Exchange Commission on May 8,
2008)
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4.
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Amended
and Restated Term Loan Agreement, dated as of May 5, 2008, among
Wheeling-Pittsburgh Corporation, Wheeling-Pittsburgh Steel Company, Essar
Steel Holdings Limited and any other lender from time to time party
thereto (incorporated by reference to Exhibit 10.2 to Esmark Incorporated
Current Report on Form 8-K filed with the Securities and Exchange
Commission on May 8, 2008)
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SIGNATURE
After
reasonable inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and
correct.
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June
6, 2008
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ESSAR
STEEL HOLDINGS LIMITED
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By:
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/s/ Madhu
S. Vuppuluri
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Name: Madhu
S. Vuppuluri
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Title: Authorized
Signatory
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SCHEDULE
A
ADDITIONAL
INFORMATION CONCERNING THE REPORTING PERSON
ESSAR
STEEL HOLDINGS LIMITED
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Name
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Business
Address
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Principal
Occupation/
Employment
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Name/Principal
Business/Address
of
Principal
Employment
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Citizenship
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Uday
Kumar
Gujadhur
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10,
Frere Felix de Valois
Street, Port Louis, Mauritius
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Director,
Essar Steel
Holdings Limited
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Director,
Essar Steel Holdings Limited
10,
Frere Felix de Valois Street
Port
Louis, Mauritius
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Mauritian
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Yuvraj
Kumar
Juwaheer
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10,
Frere Felix de Valois
Street, Port Louis, Mauritius
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Director,
Essar Steel
Holdings Limited
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Director,
Essar Steel Holdings Limited
10,
Frere Felix de Valois Street
Port
Louis, Mauritius
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Mauritian
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Jatinder
Mehra
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A-5,
Sector-3, Noida
201301, UP
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Chief
Executive
Officer, Essar Steel
Holdings Limited
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Director,
Essar Steel Limited
11,
K.K. Marg, Mahalaxmi
Mumbai
400034
India
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Indian
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Robin
Banerjee
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11,
K.K. Marg, Mahalaxmi,
Mumbai 400034
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Chief
Financial Officer,
Essar Steel Holdings
Limited
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Director,
Essar Steel Limited
Principal
business – steel manufacturing
Address
- 11, K.K. Marg, Mahalaxmi,
Mumbai 400034
India
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Indian
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Vikram
Amin
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11,
K.K. Marg, Mahalaxmi,
Mumbai 400034
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Executive
Director,
Sales and Marketing,
Essar Steel Holdings
Limited
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Director,
Sales and Marketing, Essar
Steel Limited
11,
K.K. Marg, Mahalaxmi
Mumbai
400034
India
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Indian
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EXHIBIT
INDEX
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Exhibit
No.
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Description
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1.
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Memorandum
of Agreement, dated as of April 30, between Essar Steel Holdings Limited
and Esmark Incorporated (incorporated by reference to Exhibit 10.1 to
Esmark Incorporated Current Report on Form 8-K/A filed with the Securities
and Exchange Commission on May 22, 2008)
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2.
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Agreement
and Plan of Merger among Essar Steel Holdings Limited, the entity
designated therein as Purchaser and Esmark Incorporated (incorporated by
reference to Exhibit 99.2 to Esmark Incorporated Current Report on Form
8-K/A filed with the Securities and Exchange Commission on May 22,
2008)
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3.
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Term
Loan Agreement, dated as of May 2, 2008, among Esmark Incorporated, Esmark
Steel Service Group, Inc., the other Loan Parties party thereto, the
Lenders party thereto and Essar Steel Holdings Limited (incorporated by
reference to Exhibit 10.1 to Esmark Incorporated Current Report on Form
8-K filed with the Securities and Exchange Commission on May 8,
2008)
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4.
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Amended
and Restated Term Loan Agreement, dated as of May 5, 2008, among
Wheeling-Pittsburgh Corporation, Wheeling-Pittsburgh Steel Company, Essar
Steel Holdings Limited and any other lender from time to time party
thereto (incorporated by reference to Exhibit 10.2 to Esmark Incorporated
Current Report on Form 8-K filed with the Securities and Exchange
Commission on May 8, 2008)
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