Asserts President Trump’s February 7th Remarks Make it Abundantly Clear a Sale to Nippon is Dead and Will Not be Resurrected: “I Didn't Want it Purchased”
Believes the Board Must Cease Fruitless Lobbying and Wasteful Litigation in Favor of Immediately Collecting the $565 Million Termination Fee Owed by Nippon
Deems it Irresponsible for the Board to Allow David Burritt, a Conflicted and Failed CEO, to Continue Wasting Time by Pursuing an Unlikely Investment from Nippon
Highlights That Independent Slate and Steel Industry Legend Alan Kestenbaum Are Ready to Lead Multibillion-Dollar Capital Investment Program to Revitalize the Company
Dear Members of the Board,
As we told you in our January 27th public letter, the sale to Nippon is dead. President Trump’s remarks on Friday should confirm – once and for all – that the sale has no chance of being resurrected. We applaud his steadfast commitments to protecting U.S. Steel and reviving America’s industrial and manufacturing industries. The Board now must decide if it stands with shareholders or if it still stands with failed Chief Executive Officer David Burritt, who appears to have driven the Company off a cliff in pursuit of his $72 million transaction-related payday.
If the Board intends to prove that it is truly aligned with shareholders, rather than the merger arbitrage funds who favored Mr. Burritt’s poor gamble on Nippon, it should take the following steps:
1.Immediately terminate the merger agreement and collect the $565 million breakup fee from Nippon;
2. Immediately end the exorbitantly expensive deal-related advocacy and withdraw from the litigation filed with Nippon, and;
3. Finally engage with Ancora, which has offered the Board a viable catalyst for a turnaround in Alan Kestenbaum, who oversaw the legendary turnaround at Stelco after U.S. Steel bankrupted the business.
Our slate of independent director candidates and Mr. Kestenbaum are prepared to lead a multibillion-dollar capital investment program focused on reinvigorating the legacy blast furnaces at Mon Valley and Gary Works while using the proceeds from the breakup fee to offset upfront capital needs. We are offering the Company access to a world-class Chief Executive Officer, an experienced set of director candidates and a clear path to revitalizing the business. This not only represents the best value proposition put forth by any domestic party at this time, but it far exceeds what can be offered by Nippon at this point.
If you opt to continue ignoring us and narrowly focus on what we expect to be elusive investments from Nippon, we will assume you are aligned with Mr. Burritt. Under this scenario, we will take all necessary actions to break the Company’s culture of entrenchment and prevent the wasting of shareholders’ capital. Long-term investors do not want any more of their money wasted simply because Mr. Burritt and his arbitrageur friends hold losing lottery tickets.
Negotiating an investment from a foreign competitor like Nippon could take months. This is time that U.S. Steel cannot afford to misallocate based on the Company’s own statements. If there is no buyout premium to be paid, the Board should hire a real leader, like Mr. Kestenbaum, to negotiate on behalf of the long-term stakeholders of the Company, as opposed to Mr. Burritt who has seemed more concerned with preserving a change of control payment than collecting the much-needed breakup fee. Keep in mind, Mr. Burritt has irreparably destroyed the Company’s relationship with its union workers, and that contract comes up in the near future. It is almost unfathomable to envision a scenario in which Mr. Burritt can successfully execute a new labor agreement that would be mutually beneficial for shareholders and workers.
In closing, it is time for U.S. Steel to get back to business and focus on leveraging President Trump’s pending tariffs as a tailwind for a turnaround. The only thing standing in the way is Mr. Burritt and his focus on securing a massive golden parachute at all costs. It is only a matter of time until the Company’s shares begin to reflect the fact that a busted deal has left investors with a failed and visionless leader in Mr. Burritt. We urge you, as fiduciaries, to engage with us before there is any permanent impairment of value at U.S. Steel.
Regards,
Fredrick D. DiSanto
Chairman and Chief Executive Officer
Ancora Holdings Group, LLC
James Chadwick
President
Ancora Alternatives LLC
Source:
Comments