On Friday, the Securities and Exchange Commission (SEC) announced it had settled charges against Esmark in regard to its proposed purchase of U.S. Steel.
According to the SEC’s order, Esmark, at the behest of its founder, chairman and former CEO James P. Bouchard, announced an offer on August 14 for all issued and outstanding shares of U.S. Steel for $35 per share. The tender offer would have required $7.8 billion in cash, the SEC said, money with Esmark and Bouchard did not have. Bouchard appeared on a cable news program and said the company had $10 billion available in cash to pay for the deal, and would not need to put up any of Esmark’s assets as collateral.
The SEC said its investigation found that those statements were false, and that Esmark didn’t have the required cash, and that Bouchard did not have any reason to believe that they would have the money required to complete the tender offer.
“Bouchard and Esmark could not have completed the tender offer for U.S. Steel that they announced,” Antonia M. Apps, Director of the New York Regional Office, said. “Investors should be able to trust companies’ and executives’ public statements.”
The SEC’s order finds that Esmark and Bouchard violated Section 14e of the Securities Exchange Act of 1934, and Rule 14e-8. Esmark and Bouchard agreed to cease and desist from committing or causing any future violations of the regulations and to pay civil penalties of $500,000 and $100,000 for the violations.