New Life or the Scrap Bin for RG Steel Plants?
YOUNGSTOWN, OHIO -- Will there be new operators for RG Steel’s mills in Warren and Sparrows Point, Md., or will the massive industrial structures be sold for scrap like RG’s Mingo Junction plant apparently will be? That question should be answered sometime Tuesday, if the Warren and Sparrows Point asset auctions proceed as scheduled by U.S. Bankruptcy Judge Kevin Carey.
The auctions are set for 10 a.m. tomorrow in the New York offices of RG Steel’s co-counsel, Willkie Farr & Gallagher LLP. A hearing will be held Aug. 15 to confirm or reject the results of the auctions. Objections must be submitted by the close of business Aug. 8 to U.S. Bankruptcy County for the District of Delaware.
Last week’s deadline for a “stalking horse” passed without a base-setting bidder emerging. Judge Carey gave RG Steel more time to solicit such bids but as of this posting, if any were received, none have been made public.
Some 1,000 steelworkers are furloughed at RG’s Warren plant; 1,600 at its Sparrows Point plant. RG entered Chapter 11 bankruptcy reorganization May 31.
Late last week Frontier Industrial Corp. placed a $20 million bid for RG’s Mingo Junction steel plant. Frontier, based in Buffalo, is not a steel operator but rather specializes in demolishing and scrapping big industrial buildings.
The Mingo Junction mill, formerly Wheeling-Pittsburgh Steel Corp., saw the installation in 2004 of a $115 million electric arc furnace but it “never did work properly,” notes The Wheeling News-Register.
Frontier Industrial’s website lists a number of its services, and all are described as specialty contracting related to industry demolition.
Also last week, bids were received for most of RG Steel’s assets in West Virginia, two of them from major steel producers, Nucor Corp. and Esmark Steel Group.
Nucor Corp., based in Charlotte, N.C., submitted a cash bid of $7 million for RG’s Wheeling Corrugating division. Nucor also brokers metals and processes scrap through The David J. Joseph Co., according to its website.
The Nucor bid has been approved by unsecured creditors. It will be reviewed by the court at a sale hearing scheduled for Wednesday.
So, too, will bids be reviewed Aug. 8 for RG’s facilities in Yorkville and Martins Ferry, W. Va.
Esmark Steel Group LLC, based in Chicago Heights, Ill., submitted a cash purchase bid of $5.15 million for RG Steel’s Yorkville plant. Frontier Industrial Corp. bid $4.9 million for the same facilities.
RG’s Martins Ferry operations drew a cash bid of $2 million by businessmen W. Quay Mull II and Joseph N. Gompers.
RG Steel paid $1.2 billion in March 2011 to buy OAO Severstal’s Sparrows Point, Warren and Wheeling steel mills. Until its bankruptcy shutdowns, it was the nation’s fourth-largest flat-rolled steel producer with annual capacity of 7.5 million tons. The company is a unit of the Renco Group Inc., an affiliate of billionaire investor Ira Rennert.
Copyright 2012 The Business Journal, Youngtown, Ohio.
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