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Judge Approves Sale Of RG Steel Assets

Wed, 08/15/2012 - 7:49pm
RANDALL CHASE - AP Business Writer - Associated Press

(AP) — A federal bankruptcy judge in Delaware has approved the sale of assets of steelmaker RG Steel in Ohio and Maryland.

The sale orders approved Wednesday by U.S. Bankruptcy Judge Kevin Carey include the $72 million purchase of the Sparrows Point steel mill near Baltimore to Hilco Industrial, a company that specializes in industrial liquidations.

Carey also approved the sale of RG Steel's assets at its Yorkville, Ohio, facility to Esmark Steel Group. Esmark bid $4.75 million for the Yorkville assets last month, agreeing to offer jobs to at least 230 employees at the site. Esmark offered an additional $400,000 for mineral interests related to the Yorkville sale.

Carey also was asked to approve the sale of RG Steel's Warren, Ohio, facility to Pennsylvania-based C.J. Betters Enterprises for $16 million. Betters has said it would like to restart operations at the Warren mill.

RG Steel, the nation's fourth-largest flat-rolled steel manufacturer, sought bankruptcy protection in late May, citing financial struggles with low steel prices and high raw material costs.

Since the bankruptcy filing, RG Steel has been working to sell off assets in order to satisfy secured lenders who are owed some $450 million and have liens on virtually all of the company's assets.

RG Steel, which had an annual production capacity of more than 8 million tons, was formed in March 2011 as a wholly owned subsidiary of the privately held Renco Group. The company sought bankruptcy protection a week after announcing it would idle factories in Maryland, West Virginia and Ohio and lay off thousands of employees.

RG Steel said it began having substantial liquidity problems last year as steel prices sank while raw material prices remained at peak levels, and that it also faced significant setbacks in restarting its Sparrows Point factory. A blast furnace there was idle when Renco acquired the former Bethlehem Steel facility from Russian-owned Severstal North America in a $1.2 billion deal that also included plants in Wheeling, West Va., and Warren.

In connection with the sale of the Sparrows Point site, attorneys agreed to establish a $500,000 escrow fund to pay for offshore investigation of water contamination. Hilco and its partner, Environmental Liability Transfer, also agreed to assume RG Steel's obligations under a water-quality monitoring agreement with environmental regulators.

After a lengthy dispute over monitoring for toxic contaminants at the Sparrows Point site, RG Steel reached an agreement with the U.S. Environmental Protection Agency and Maryland environmental regulators late last year requiring the company to sample sediments no more than 50 feet offshore.

Environmentalists are challenging a federal judge's approval of the agreement. They contend that contaminants have been found much farther offshore and that the scope of the monitoring agreement, which stems from a 1997 consent decree between environmental regulators and the mill's former owner, Bethlehem Steel Corp., should be expanded.

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