RG Steel LLC, the fourth-biggest U.S. maker of flat-rolled steel, won court approval to sell some of its assets to two different buyers for a combined $22 million.
U.S. Bankruptcy Judge Kevin Carey in Wilmington, Delaware, today granted the steelmaker approval to sell assets at its Mingo Junction and Martins Ferry facilities in Ohio.
RG Steel held auctions July 31 for assets of multiple facilities and reached five deals last week that would generate about $35.7 million, according to court documents.
“After a fairly robust auction with multiple rounds of bidding,” Frontier Industrial Corp. emerged as the winner for the Mingo Junction assets, Shaunna D. Jones, a lawyer for RG Steel, told Carey at today’s hearing.
Frontier will buy the Mingo Junction assets for $20 million and the Martins Ferry assets will be sold to W. Quay Mull II and Joseph N. Gompers for $2 million, according to court filings.
Some of the Mingo Junction buildings could be demolished, Raymond L. Fink, a lawyer representing Frontier, told Carey in response to being asked whether the operations will be restarted. “Perhaps some of the operations” will resume “but not all of them,” Fink said.
The buyer hasn’t yet decided how it will move forward and it is “premature” to tell, Fink said in an interview after the hearing. “The most viable option will be pursued,” he said.
RG Steel notified the court on July 31 that it would delay the auctions for its Sparrows Point, Maryland, and Warren, Ohio, assets. Auctions of the Sparrows Point and Warren assets were set to be held yesterday and a hearing to request court approval to sell the assets to the winning bidders is set for Aug. 15, according to court documents.
Jones declined to comment on the status of the Sparrows Point auction, one of the largest single-site steel-making facilities in the U.S. with an annual capacity of 3.9 million tons.
The steelmaker negotiated sales last week of assets at its Wheeling Corrugating division in Wheeling, West Virginia, to Nucor Corp. for $7 million, according to court documents. Esmark Steel Group LLC won the bidding for assets at its Yorkville, Ohio, plant with an offer of about $5.2 million. The company will seek court approval of those sales at the Aug. 15 hearing. Esmark will also buy the equity in Ohio Coatings Co. for $1.5 million.
RG Steel, based in Sparrows Point, Maryland, listed assets and debt of more than $1 billion each in Chapter 11 documents filed May 31. The company suffered “substantial liquidity problems” beginning in mid-2011, “driven by a rapid decline in steel prices, while raw material prices remained at peak levels,” according to a filing by Chief Financial Officer Richard Caruso.
Renco Group Inc. bought the steelmaker from Russia’s OAO Severstal last year for about $1.2 billion, less than three years after Severstal acquired it for $2.2 billion. Renco created RG Steel to buy the mills, which can produce 8.2 million tons of steel a year.
The company and its affiliates are 75 percent-owned by Renco, with the remaining equity owned by Cerberus RG Investor LLC, according to court papers.
The lead case is In re WP Steel Venture LLC, 12-11661, U.S. Bankruptcy Court, District of Delaware (Wilmington).