RG Steel LLC, the fourth-biggest U.S. maker of flat-rolled steel, won court approval to sell more of its assets for a combined $93.7 million after selling $22 million worth of assets last week.
U.S. Bankruptcy Judge Kevin Carey at a hearing today in Wilmington, Delaware, granted the steelmaker approval to sell assets at its prized Sparrows Point, Maryland, facility and its Warren and Yorkville, Ohio, plants.
RG Steel held auctions on July 31 and Aug. 7 reaching deals worth $122.7 million, court papers show. After today, the company has completed about $132.2 million in court-approved sales.
The steelmaker will seek court approval to sell its Wheeling Corrugating division in Wheeling, West Virginia, to Nucor Corp. for $7 million next week. Last week it sold assets at its Mingo Junction and Martins Ferry facilities in Ohio for $22 million. It sold a plant in Steubenville, Ohio, for $15 million in June.
Environmental Liability Transfer Inc., Commercial Development Co. and Hilco Trading Co. will buy the assets of Sparrows Point, one of the largest single-site steel-making facilities in the U.S. with an annual capacity of 3.9 million tons, for about $72.5 million.
The group added $500,000 to the purchase price to resolve objections from the Environmental Protection Agency and the Maryland Department of Environment by funding an offshore investigation.
“We want to find operators to help people get back to work,” said Eric W. Kaup, general counsel for Hilco Trading. “Going concern options” will be explored in an effort to keep the mills open, Kaup told Carey.
The Warren assets were sold to CJ Betters Enterprises Inc. for about $16 million and its Yorkville assets were sold to Esmark Steel Group LLC for about $5.2 million, according to court filings. Esmark also bought 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).