SHENANGO VALLEY — Russian steelmaker Novolipetsk Steel is reneging on a $3.5 billion deal to buy Wheatland Tube Co.’s owner, according to a lawsuit.

In August Novolipetsk inked a deal to buy John Maneely Co. from The Carlyle Group and the Zekelman family, which was initially set to close on Sept. 29., according to the suit filed in federal court in Manhattan by Carlyle. When the date passed without the deal closing, Novolipetsk told Carlyle it would close the deal no later than Oct. 15.

But instead of trying to close the deal on the original terms, Novolipetsk “has sought instead to renegotiate terms of the merger agreement and has attempted to extract from the company a lower purchase price than the one it is contractually committed to pay,” the suit says. Further, the complaint alleges that Novolipetsk has been failing to use “commercially reasonable efforts” to secure financing for the deal.

An attorney involved in the sale for Carlyle said Novolipetsk to date has refused to close the sale.

“We believe the closing conditions were satisfied late September,” said the attorney, who asked not to be identified because he wasn’t authorized to speak publicly on the case. “They have refused to close the transaction to date. We are still under contract,” he said of the sale. “We now have pending litigation.”

Novolipetsk is Russia’s largest steelmaker and is controlled by Russian billionaire Vladimir Lisin. The company is publicly traded on the London and Moscow stock exchanges.

In a news release issued Saturday, Novolipetsk, also known as NLMK, said it would “vigorously” defend itself against the suit.

“There have been disagreements concerning the rights and obligations of the parties under the merger agreement, and at this time, NLMK has not closed the transaction,” the release said.

In a separate news release, Novolipetsk said it expected “a slowdown in steel demand and the weakening of the pricing environment” for the remainder of the year.

This is the latest in a series of major buyouts that have soured over the past month as credit markets have dried up due to the ailing economy.

When Novolipetsk announced the deal in August, the company said the company would finance the sale from available bank commitments, including a recently established $1.6 billion pre-export finance loan facility and a $2 billion bridge loan provided by Merrill Lynch, Deutsche Bank and Societe Generale.

Merrill Lynch found itself financially squeezed due to the economy and is now being sold to Bank of America.

Carlyle bought Maneely, a pipe and tube producer, in March 2006 for $550 million and steadily bought other businesses, most notably Sharon Tube Co., as a way to enhance Maneely’s production capacity. Using the purchase price as a base, Carlyle would earn more than five times its original investment.

All of this comes at a time when the pipe and tube industry is also feeling the woes of the economic downturn. Last week Wheatland Tube said it was laying off 200 local workers due to lackluster sales. Most of those layoffs are expected to last a week or so.

A Wheatland Tube spokesman on Sunday declined to comment on Carlyle’s suit or how it may affect the company.

Maneely employs 2,300 people in the U.S. and Canada, including 1,200 in Sharon, Wheatland, Niles and Warren, Ohio.

During Carlyle’s ownership, sales increased by $800 million, a 36 percent rise, to an estimated $3 billion in fiscal 2008 from $2.2 billion in fiscal 2006.

Novolipetsk has annual revenues of about $7.7 billion. With 70,000 employees, the company operates plants across Russia, Europe and the U.S. NLMK is also known locally through its joint venture with Duferco Group, the company that operates Duferco Farrell Corp. and Sharon Coating LLC, previously known as Winner Steel. Duferco Farrell’s steel plant is the key supplier of hot rolled coils to Maneely and in particular is the largest supplier to Wheatland Tube’s Wheatland pipe plant. By buying Maneely, NLMK said it expected to extract about $35 million in annual cost savings.

Selling products in 80 nations, NLMK produces a variety of steel products such as slabs and billets, hot rolled, cold rolled, galvanized and electrical sheet, rebar, steel plate and other high value-added products.

Maneely touts itself as North America’s largest independent tubular producer.

Through its Wheatland and Atlas Tube divisions, it has the No. 1 market share in North America in each of its three core product categories: hollow structural sections, standard pipe and electrical conduit.

Maneely operates 11 plants in five states and one Canadian province with total annual production of more than 3 million tons of pipe and tube. In the 12 months ended June 30, Maneely shipped 2.1 million tons of pipe and generated revenue of $2.4 billion and $485 million in earnings before interest, taxes, depreciation and amortization.

Washington, D.C.-based Carlyle Group is a global private investment firm that manages $82.7 billion in assets.