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Steelworkers Union Reports RG Steel Auction Delayed
YOUNGSTOWN, Ohio -- No stalking horse bidder is publicly identified, no official update is available from U.S. Bankruptcy Court in Delaware, only a four sentence-post on the local union’s website that reports today’s scheduled auction of the assets of RG Steel’s Warren and Sparrows Point mills “has been postponed for a week or so.”
Local 1375 of the United Steelworkers of America posted the update at 6:30 p.m. Monday, 90 minutes after the court-imposed deadline for a stalking horse (initial number-settingi) bidder to emerge. None did, according to the chronological posting of case documents at this website. And as of this posting early Tuesday, no additional information was available.
U.S. Judge Kevin Carey set a July 25 deadline for bids to be submitted for RG Steel’s assets. Published reports list three companies as having submitted bids for RG Steel’s Sparrows Point mill outside Baltimore: Nucor Corp., Metinvest Group, a Ukrainian company, and CSN of Brazil. No potential buyers have been identified for the Warren mill, which employed 1,100 hourly workers until its shutdown six weeks ago.
In setting the auction timetable, Judge Carey ruled the emergence of a stalking horse bidder would delay the auction until Aug. 21. If no stalking horse bidder was identified, the assets auction was to take place today at 10 a.m. in the New York offices of RG’s lead bankruptcy attorneys.
RG Steel, which paid $1.2 billion to buy OAO Severstal’s Sparrows Point, Warren and Wheeling steel mills in March 2011, filed Chapter 11 bankruptcy in May. RG Steel is a unit of the Renco Group Inc., an affiliate of billionaire investor Ira Rennert.
Rennert operated the former WCI Steel for more than 15 years, and the announcement of the Renco Group’s purchase drew praise from union leaders. “I feel comfortable with him as the new owners,” said Ed Machingo in March 2011.
At the time, Machingo was president of USW Local 1375. Today Darryl Parker is president of the Local 1375.
A week before seeking bankruptcy reorganization, RG Steel executives told USW leaders, “The company’s lenders and equity investors have advised that they are suspending funding of ongoing ordinary course of operations of the company,” and the company would be seeking a buyer for its three steel mills.
RG Steel was the nation’s fourth-largest producer of flat-rolled steel. In its Chapter 11 petition, RG said both its assets and liabilities exceed $1 billion.
Severstal is still owed $100 million from its sale of the steel mills to RG.RG counters in bankruptcy documents that Severstal owes its $82 million in relation to a working capital shortfall.
Copyright 2012 The Business Journal, Youngstown, Ohio.