Union Official Says Liquidation Company is Highest Bidder for Sparrows Point
Aug. 8, 2012
A top union official told RG Steel Sparrows Point steelworkers on 8 August that Hilco Industrial, a Michigan liquidation company, is the winning bidder for the mill. Its bid was $72 million.
The email from United Steelworkers Local 9477 President Joe Rosel says that yesterday’s auction of the Baltimore County facility “did not go as planned nor as we expected.”
Rosel said that no steel company bid on the assets of Sparrows Point – which has a book value of $1 billion – or the steel mill at Warren, Ohio, also being disposed of by RG Steel under the bankruptcy proceeding.
Last week, Hilco Industrial was the unsuccessful bidder of RG Steel’s Mingo Junction mill under an affiliate named HRE Mingo LLC. It lost out to Frontier International, a demolition company that purchased the Ohio steel mill for $20 million.
About 1,600 union employees work at Sparrows Point. Nearly all of them have been laid off after the mill’s parent company, RG Steel, filed for Chapter 11 bankruptcy protection on 31 May.
Rosel told membership that “at this point we still have SUB pay and health care. It is our understanding that the new company also will have to assume our contract under the Chapter 11 bankruptcy, but going forward we don’t know how that will play out in terms of severance or benefits.”
Official confirmation of the sale of Sparrows Point to Hilco has not yet been placed on the court docket of the U.S. Bankruptcy Court in Wilmington.
A hearing on the sale of the Sparrows Point, Warren, Yorkville and Wheeling Corrugating assets will be held before U.S. Bankruptcy Court Judge Kevin Carey at 10 a.m. next Wednesday, 15 August, in Wilmington, Del.
Steel Market Update reported that the winning bidder of Warren is an obscure scrap dealer in western Pennsylvania, C.J. Betters Enterprises. Its winning bid was reported to be about $18 million.
This would make the total auction price for Warren, Sparrows Point and RG Wheeling $125.2 million – vastly below their reported $1.3 billion in assets and a fraction of the $434 million in secured senior claims held by Wells Fargo, GE Capital and other banks