U.S. Steel has agreed to keep making steel in Slovakia for at least five years under the terms of an agreement disclosed Tuesday by Slovak government officials.
The Pittsburgh steelmaker will receive about $19 million annually for 15 years in renewable energy subsidies from the government. Slovak officials also agreed to provide assistance with landfill costs and to help U.S. Steel pursue financial assistance from the European Union for environmental projects.
In return, U.S. Steel promised not to make mass layoffs at the plant through at least next year, unless there is a severe economic downturn or an adverse change in steel market conditions.
It also agreed to pay the government if it sells the plant in the next five years. The payments range from $60 million if the sale occurred in the first year after the agreement to $15 million if it occurred in the fifth year of the agreement.
U.S. Steel purchased the former government-owned steelmaker in 2003 for $475 million. The plant, located in Kosice in eastern Slovakia, employs about 13,000 and is capable of producing 5 million tons of sheet steel annually. It generated $51 million in operating profits last year.
U.S. Steel disclosed in November it was considering offers for the mill. That announcement came 10 months after Europe's economic woes prompted the company to sell its troubled Serbian operations to the Serbian government for $1.
The company has said it expects to spend $400 million at Kosice to comply with European Union environmental regulations that will be implemented in March 2016. It has been studying whether it could get grants from the EU to cover a portion of those costs.
Separately, U.S. Steel said it raised $576.6 million after costs from the sale of $591.3 million in senior notes.
U.S. Steel shares closed Tuesday at $19.96, up 23 cents.mobilehome - breaking - businessnews
Len Boselovic: email@example.com or 412-263-1941. First Published March 26, 2013 11:00 AM