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RG, Arcelor Battle Today Over Easements, Option
WARREN, Ohio – Lawyers are squaring off today in Wilmington, Del., armed with stacks of legal arguments as bankrupt RG Steel and Arcelor Mittal wage a last-minute fight over property easement rights and a purchase option for the boiler and power house adjacent to RG’s hot roll mill on Pine Avenue S.E.
ArcelorMittal owns the coke plant next to RG Warren, and employs 135 steelworkers at the site. Pursuant to an asset purchase agreement signed in 1988 with LTV Steel, which then owned the steel plant, ArcelorMittal retained easement and purchase rights for the boiler and power house.
The issue, to be decided by U.S. Bankruptcy Court in Delaware, is holding up Judge Kevin J. Carey’s final approval of the sale of RG’s Steel’s Warren assets to C.J. Betters Enterprises Inc. of Monaca, Pa.
On Aug. 15, Betters and ArcelorMittal agreed to a continuance on the sale motion so the parties could attempt to negotiate an agreement. Absent resolution, a hearing on the sale motion was scheduled to take place today.
According to an agenda posted late Wednesday, the hearing will go forward.
“ArcelorMittal Warren spills a great deal of ink trying to convince this court” that its purchase option under Ohio law should be binding, and not rejected through Chapter 11 reorganization as other executory contracts are, states the argument filed Aug. 22 by RG’s bankruptcy attorneys, “
Moreover, attorneys argue, “[RG] may sell the Warren assets free and clear of AMW’s purported interest arising out of the option agreement.”
In documents filed by its attorneys, ArcelorMittal argues precedent has been set in its favor. “These [easement and purchase option] agreements have survived between, and been adhered to by, the various owners of ArcelorMittal’s coke plant and the various owners of the Warren property for over 20 years, including riding through the bankruptcies of LTV (2002) and WCI (2003),” the forerunners to RG Steel.
Yesterday U.S. Rep. Tim Ryan, D-Niles, weighed in on the issue, releasing to the press a letter he wrote to Judge Carey. The congressman urged the judge to carefully consider access to the power plant shared by RG Steel and ArcelorMittal. “There are about 1,200 steelworkers who have been affected by the recent shutdown at RG Steel as well as 135 steelworkers at ArcelorMittal who rely on this power plant for their daily work responsibilities,” he stated.
Ryan’s letter recognizes the judge is “allowing C.J. Betters a period of nine months to secure financing in hopes of reopening the former RG Steel facility. During this nine-month period, any disruption or future stoppage of this facility’s ability to access power from the adjacent power plant could put in jeopardy any future financer or purchaser’s ability to re-open and provide power,” he stated. “While I understand that you must balance many important concerns, I encourage you to include maintaining access to the power plant in your consideration as you make your final decision.”
Copyright 2012 The Business Journal, Youngstown, Ohio.