A World War II Victory Rally at Sparrows Point. The now-shut steel mill may get a new lease on life.
Photo by: Hagley Museum and Library
(UPDATE on Thursday, 7/26, 7 a.m.: Sources tell The Brew that the domestic steelmaker who filed bidding papers yesterday for the purchase of Sparrows Point is Nucor. Please note that this is a preliminary step, subject to change among all of the parties, as the Chapter 11 sales process moves forward.)
At least three companies, two from overseas, filed papers by today’s deadline as potential buyers of Sparrows Point, giving the first concrete evidence that steelmaking may return to the plant where 1,500 workers are laid off.
Sources identified the two foreign bidders as CSN, the Brazilian steelmaker, and Optima Fund Management, a hedge fund associated with Metinvest, a Ukrainian mining group. A domestic steel company also submitted a bid for Sparrows Point’s assets by today’s deadline.
Each of these concerns say they want to restart operations at the Point, which were closed two months ago after owner RG Steel filed for Chapter 11 bankruptcy.
Today was the deadline for submission of qualified bids for assets owned by RG Steel.
In addition, there were one or more bids placed on returning RG Steel mills at Warren, Ohio, and Wheeling, W.Va. to full or partial operation, sources reported.
Altogether, more than 18 groups submitted bids for one of the three steel mills, with many of these bids from scrap dealers and related companies who seek RG Steel’s physical assets, such as machinery and raw materials, and do not plan on restarting the facilities.
The Sparrows Point Steelworkers Local 9477 had pinned its hopes on CSN, which had blown hot and cold over the purchase of Sparrows Point even before RG Steel filed Chapter 11 bankruptcy on May 31.
CSN engineers visited the plant, which would help the company gain greater entry into the American steel market and also serve as an outlet for tin plate, a mill specialty, for sale in South America.
The Optima Fund/Metinvest group had sought to purchase Sparrows Point from Severstal in 2011. It was rebuffed by the Steelworkers union who favored Ira Rennert, the billionaire owner of RG Steel, which racked up more than $440 million in operating losses before it filed for bankruptcy.
Seeking a Stalking Horse
Under the rules approved for the asset sale, a potential buyer had to submit a bid by noon today to qualify, along with a cash deposit of 2% of the proposed purchase price.
RG Steel has until next Monday to designate a leading or “stalking horse” bid or bids. This will establish a base line for the sale of the three plants and will enable the potential buyer to negotiate with the United Steelworkers union over successor agreements for a labor contract.
A final auction of the properties would take place on August 21.
If no stalking horse is identified, an auction for the properties would be held on July 31 in the law offices of Willkie, Farr & Gallagher in Manhattan
All parties had signed confidentiality agreements prior to today’s bid deadline.
A spokesperson for RG Steel did not respond to an email request for comment tonight. Officers of Sparrows Point Local 9477 USW could not be reached.
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