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New Sparrows Point owner can void labor contract with Steelworkers

The "successorship clause" in the current contract will have little impact once Sparrows Point is sold. A hearing to approve the sale is scheduled for this morning.

Martin O’Malley John Goodwin

Maryland Gov. Martin O’Malley confers with RG Steel President John Goodwin last January after Sparrows Point escaped a cash crisis.

Photo by: Mark Reutter

Under terms disclosed in court documents last night, the new buyer of Sparrows Point can tear up the existing United Steelworkers labor contract and cease paying wages and benefits to the existing 1,600-member workforce.

The “successorship clause” of the current contract between the USW and RG Steel will have little impact once Sparrows Point is sold because the new owners can terminate RG Steel employees at their discretion.

This morning Judge Kevin Carey is expected to approve the sale of the mill during a hearing in U.S. Bankruptcy Court in Wilmington, Delaware.

Whether the new owners plan to exercise their legal rights was not disclosed in last night’s Asset Purchase Agreement. Nor have the purchasers made any public statements of their intentions since they won the August 7 bankruptcy auction.

Steelworkers Local 9477 President Joe Rosel said yesterday that he plans to “reach out” to the new owners after the sale is completed and pursue his plan to find the “right owner for Sparrows Point” that will return the mill to active production and recall its idled workforce.

That might be difficult given the terms of the purchase agreement between RG Steel and the new buyers.

“All rights, obligations and interests in or relating to any labor agreements, collective bargaining agreements, shop agreements, work rules or practices” are null and void after the property is sold to Hilco Industrial, a Chicago liquidator, and Environmental Liability Transfer (ELT), a St. Louis brownfield developer, according to the purchase agreement.

In addition, the new buyers “shall have no obligation to pay wages, bonuses, severance pay, benefits or any other payments to employees of the debtors [RG Steel],” the document says.

Today’s sale hearing before Judge Carey will cap an expedited bankruptcy proceeding that began when Sparrows Point’s parent, RG Steel, filed for Chapter 11 protection last May 31.

No Provision to Preserve “Core Assets”

The asset purchase document also does not require Hilco and ETL to preserve the core assets of the steel mill for six months.

Last week, mill manager Glenn Mikaloff wrote in an internal memo saying that Hilco did intend to preserve the plant’s assets for six months, reportedly in hopes of reselling the mill to an operating steel company.

Hilco and ETL did agree to assume the existing environmental agreements with the Environmental Protection Agency (EPA) and Maryland Department of the Environment, including a 1997 consent decree to clean up the heavily-polluted property.

In a separate document, James Tumulty, RG Steel’s investment banker, disclosed that six companies were involved in last week’s auction of Sparrows Point’s assets.

In addition to Hilco-ELT, they consisted of three demolition companies, one steel distributor and one unknown entity.

Brazilian steelmaker CSN – widely reported as interested in buying the mill – did not participate in the auction.

The bidders were Niagara Worldwide LLC (demolition), C.J. Betters Enterprises (demolition and property redevelopment), D.H. Griffin and Gibb International (demolition), SB International Steel (steel distributor), and Georgia Financial IV LLC, an entity formed in Delaware last May.

Tumulty Denies “Any Collusion or Fraud”

Tumulty denied in his affidavit that Cerberus Capital Management, which owns 24.5% of RG Steel and advanced more than $200 million to the steel company, has any involvement or interests in the new owners of Sparrows Point.

“I an not aware of any collusion or any fraud or attempt by the purchasers to assert any unfair advantage over any other potential bidder,” Tumulty stated.

“Also, to the best of my knowledge, none of the purchasers is an affiliate of any of the debtors’ lenders, including without limitation, any affiliate of Cerberus Business Finance LLC, the agency for the debtor’s second lien lenders.

“As a result, I believe that the purchasers are good-faith purchasers and the auction process was open and fair.”

Last Friday, The Brew cited public records and press accounts that indicated that Cerberus owned a stake in Hilco’s parent company, Hilco Trading.

The article noted the existence of Cerberus Hilco Investments LLC, whose business address is the same as the New York offices of Cerberus Capital Management.

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  • Union my tush

    Victims all of us!
    RG is really the worst pieces of turd of a company I have ever seen.
    At least they kept this sharade going as long as we victims let them.

  • 1190

    wait a minute the workers at s p voted to pass the contract, now they are tearing it up, KARMA BABY!

  • Hopeful

    Wow………..  its about as bad as it can get…….

  • Union my tush

    Why does Goodwin always look like a deer in the headlights?

  • baltimorebrew

    From Brew: This referred to the $128 million from Cerberus Capital to RG Steel in January. We now know that figure thanks to the Chapter 11 filings, though we still know darn little about Cerberus! -MR

  • baltimorebrew

    From Brew: I hope you noted our earlier posting on the same matter. Note alos that the bid was not acted upon by the bankruptcy court today.

    • Furnace

      Mark:  Missed your post as I was busy scouring the iNet for updates.  As usual you were on top of it!  I would like to thank you and your staff for your investigative diligence, and the Brews provision of this open forum, in a most difficult time for (now former) RG Steel employees.  Your dedication in continuing this life-line of information will not be forgotten as I venture on.

  • Bethlehem_pa_2005

    I hope RG, Severstal, and A- MITTAL rot in fucking hell. This was their plan from the beginning to run these US mills unsucessfully then plow them all to the ground. I hope their planes don’t fall out of the sky someday. 

  • Guest

    Don’t be too quick to assume there’s a conspiracy.  
    Napoleon Bonaparte has been credited with this quote – “Never ascribe to malice that which can adequately be explained by incompetence.”

     

    • Furnace

      Couldn’t agree more.  Just look at the glazed, red eyes of our corporate president.  As usual, he’s so sloshed he’s wondering what the hell What’s-In-Your-Wallet O’Malley is yammering about.  His only concern is: Where’s the bar?

      I remember this buffoons profane tirade in front of 100 subordinates when, at this drunk’s introductory business plan meeting, he was questioned why a seasoned 40+ year manager and superintendent was fired for questioning the curtailment of critical resource allocation.
       
      I’ve seen street thugs conduct themselves with more class and business savvy than Mr. GoldBrick.

      It’s a damn shame that peoples livelihoods were entrusted to this imbecile and his equally incompetent lap dog, Mikaljerkoff.

      At minimum the bankruptcy judge should reassigned the $20MM executive bonuses to pay for extended health care benefits for the production and maintenance personnel who busted their butts to keep SP afloat despite these two idiots constant barrage of bad business edicts.

         

  • Fordtrkfan

    Any steel company that comes in and looks at the  numbers will see that SP cannot be profitable, even if they did have their own Ore piles. THE MARKET IS FLOODED WITH STEEL. No one is buying right now. The customers have gone and will not trust that whoever owns SP will be able to make steel again and make it on time and with great quality. Trust in the point is long gone! Yeah if someone wanted to run the NCM they could make some money. Only if they shipped in the coils from somewhere else to run. But the rest is just not a good return.

  • Happy Man

    Why would RG Steel object to SB’s bid, what do they care who gets the plant
    HMMMMMMMMMMM

  • Ray

    who is fordtrkfan?  This dude is right on…always.  Is it Greg or Tim

  • ITSME

    listen , what the f is wrong with you steelworkers everyone of you should get together and march on washington, theres power in numbers, you all are doing this wrong. its not to late, EVERY STEELWORKER IN THIS COUNTRY TAKE TIME OFF THE JOB, F THEM AND MARCH ON WASHINGTON, DO IT MEN. BECAUSE DONT THINK IT WILL STOP HERE.

    • 1966mustang

      I said this in an earlier post. not only steelworkers, but all unions across the country should march on Washington because they, one by one, will be next! like I said, McCall planted the seed, and it has sprouted,and will keep growing until all unions are destroyed! THANKS AGAIN MCCALL!!! 

  • MICKEY 111

    MAYBE  SANTA  CLAUS  WILL  BUY  THE  MILL…MAKE  STEEL  TOYS
    WITH  HIS  LITTLE  NON UNION  ELLFS….
    MADE  IN THE  NORTH  POLE…..

  • MICKEY 111

    THANK YOU  BALTO   BREW  FOR  HELPING  UC  COMUNACATE…OK  NOW  EVRY ONE  SAY   THANK  YOU  TO  THE  BREW…CAUSE  ITS  ALL OVER  NOW

    • 1966mustang

      THANK YOU brew and Mark!

  • Ironworker

    I heard that they are going to ship the NCM overseas

  • Richpal

    Does anyone now anything about Wheeling Corrugating

    • baltimorebrew

      From Brew: Approval of the sale of Wheeling Corrugating’s equipment to Nucor was delayed yesterday by bankruptcy court until the next (wrap-up?) hearing on RG Steel’s bankruptcy. Hearing date: Aug. 23.

  • Harleyman

    Goodwin definitely needs sunglasses!

    • Guest

      O’Malley just told him he would have to pay benefits out of his bar bill.

  • Richpal

    Thanks Brew, wow another week of hell for corrugating employees.

  • Furnace

    From RG Steel News page:
    http://www.rg-steel.com/news/mediacontact.html

    “RG Steel’s goal is to be accessible to the media and to become an
    integral part of America’s industrial community.  We also strive to be
    a good neighbor and employer of choice while fostering two-way
    communications among our employees and with our communities.  ** Accurate
    and timely communications and dialog are critical to being a good
    corporate citizen.  **”

    Guess these scheisters are no longer interested in posing as “good
    corporate citizens” …

    2000 people now on PERMANENT lay-off and not a word from these STOOGES OF STEEL with regard to job or benefit status since May 31st.

    THE UNION SHOULD BE SUING FOR CORPORATE NEGLIGENCE – THIS IS WHAT WE PAY DUES FOR!

    • wciheycraneman

      Furnace. Over 5000 have lost their jobs because of these corrupt, inept bastards.

      • Bry64

        and want to give them a nice big fat bonus on top of that.

  • Harleyguy

    How in the world have we come to this point. MOUNTAN STATE CARBON W VA. Coke Plant
    Don’t get me wrong Grateful to still have a job (for now) to get rehired????
    Selectived and conditional employment (five weeks vac. Down to. 1 week) after 41 yrs.
    Employment packages given to some but not all current workers .no incentive for now pay cut
    Of approx $ 350.00 per pay no seniority all start over as of day one ,,,,, IF REHIRED!!!!!
    Represented by U S W !!!!!!!!!!!!!!!

    • RUKingin

       Where can I go to apply for a job with Mountain State Carbon or Esmark at the Yorkville plant?

      I heard that they will be letting the 35+ year dinosaurs go and hiring some of the energetic, youthful, and open-minded so these companies can prosper…

      • 1966mustang

        typical young punk attitude! you wouldnt make a good pimple on a 35 year dinosours ass!!!

        • RUKingin

           Typical post from a dinosaur (spelled correctly) who could not even fill out a job application correctly, let alone stay on a job without the Union protecting you just because you have seniority.

      • 1190

        ONE THING ABOUT IT THEY LIKE TO HIRE SO CALLED MEN WITH NO BALLS, YOUR IN! PUNK

      • 1966mustang

        you got the youthful and open minded right , but you are way off on the energetic !

    • 1966mustang

      once again we can thank santo and mcCALL.  By the way, since we no longer have  a contract, did they do away with the contract coordenators job? I am sure they did………..didnt they?…………….NOT!!!!!!!   I dont know how santO and ravasiO can face people at the union hall!! 

       

      • SANBERN

        YOU PEOPLE VOTED US IN ALL THEM YEARS NOW YOUR BITCHIN, WE DID WHAT GOOD FOR OURSELVES, THATS LIFE, LIVE WITH IT.

  • RealSteelworker

    RG Steal with the help of the USW has ruined the livelihoods
    of thousands of steelworkers & their families at all plant locations. When people
    get into power with one thing in mind and that is taking care of themselves it ruins
    the organization to its very core. There was corruption at all locals it
    sickens me to think I paid union dues to these corrupt bastards for 36 years.
    At 1190 we got a Judas among us that burned the contract on TV, got elected local
    president and if the contract is thrown out at mountain state carbon he is one
    of the ones the company will call back to work. Now when he burned the contract
    he was making a statement because he didn’t like the package that was offered I
    am just wondering when he gets his letter from the company that he is one of
    the 200 chosen few to come to work will he call the news crews up to watch him
    burn it because if he goes back to work for what they are offering it will
    probably be a lot less than what we got in our contract negoated with RG Steal.
    I’m just wondering if he can claim lost time and sit up the union hall like
    before under these circumstances. 1190 you voted the fox in to guard the hen
    house he fooled a lot of people but I caught his act early on and wasn’t fooled
    by it. I wish the best of luck to all the workers and I know that one day all
    the misdeeds done by the company and union officials will have to be accounted
    for and my only hope is they will be dealt with harshly.

    • 1190

      no one would listen, i got his number when he got hired on, he was a rat then and rats dont change. i say let then asses that voted for him reep what they have sowed. no one remembers when he wanted to take away the widows pension, now he took away yours. they get what they deserve, remember rats follw each other.

    • JUDGEROYBEAN

      THEY WILL!

  • Nationalite

    The Japanese knew what the deal was with John Goodwin when he was ejected from the helm at National Steel 16 years ago.  When the rest of the industry was making decent money, National under the Gold Chains era was lackluster and he was increasingly making enemies within the company when he needed allies.

    Ol’ Johnny showed up at National in a limousine and had a theme song “National Steel is Back” composed.  He even had PR flyers made up, expounding upon his expertise and that of his cronies.  Bought the company a French country estate on the St Joe River in Western Michigan.  What he proved to be was a foul mouthed, paranoid, disrespectful-to-the-owners buffoon.  Little by little he increasingly displayed disrespect to the workers and the owners until the day came that he was declared persona non grata.

    Maybe on this afternoon he sits in his basement, listening to recordings of “National Steel is Back” and flipping through his old promotional brochures, wishing he was at The Lodge in Niles Michigan, cursing out the groundskeeper.

    Good riddance, I think after this, there will be no more debacles at the hands of V. John Goodwin.  He’s done enough damage to enough steel companies already.

  • Cwals99

    IT IS INTERESTING THAT THIS HILGO CORPORATION IS OUT OF CHICAGO……EXELON OUT OF CHICAGO GOT MARYLAND’S ENERGY COMPANY………..BOTH AN OBAMA CONNECTION……GAMBLING MGM OF NEVADA IS A SENATE DEMOCRATIC LEADER HARRY REID CONNECTION.  ALL THIS IS NO COINCIDENCE.  CITY ASSETS ARE BEING GIVEN UP FOR O’MALLEY’S RUN FOR NATIONAL OFFICE.  HILGO HAS IN ITS INVESTOR MEMBERSHIP THE SAME PEOPLE INVOLVED IN THE ORIGINAL PURCHASE OF THE MILL.  IT WAS ALL STAGED.

  • Hillbillyracer

    Being that I worked with 1966mustang. I can tell you his
    knowledge and dedication to his craft/job and to his union brothers and sisters
    is above reproach. I think your time would be better spending worrying about
    your own family. I personally thank the older guys because they paved the road
    for the good things I had before the commies and that greedy American ass got
    the place. And believe me it was good before that! Hope the best for all my
    union broters and sisters no matter what door you choose!

    • 1966mustang

      thank you hillbilly !  it is nice to know that there are still good union brothers out there!

  • SteelDude

    Check this out.  Steel Market Update is having an event in October.  Jerry Nelson, head sales guy for RG, is gonna be one of the headliners.

    http://www.steelmarketupdate.com/modules/news/content/article.cfm?newsId=258

    I bet THAT will be an interesting speech.

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