BREW EXCLUSIVE:

Renco Group, an investment company owned by New York billionaire Ira Rennert, has signed a letter of intent to buy Sparrows Point and two other steel mills up for sale by Severstal, The Brew has learned.

The letter of intent, signed late last week but not yet publicly announced, is subject to Renco coming up with financing and other stipulations, well-placed sources say.

The purchase price is not known.

As previously reported by The Brew, Renco won exclusive support from the United Steelworkers (USW) in bidding for the three mills and secured a basic labor agreement with the union. The sale is still subject to a vote by USW members once a final agreement is reached.

Severstal spokesperson Marika Diamond today said that the steelmaker would not comment on the reported sale.

Andrew Shea, a Renco representative, said today, “The Renco Group does not have a comment on the matter at this time.”

An e-mail to Sparrows Point USW president John Cirri seeking comment was not immediately answered.

Renco Wants Warren

A private investment company with interests in mining, metal fabrication, auto manufacturing and other industries, Renco has actively sought Severstal Warren.

Renco had owned the Ohio-based company between 1988 and 2003, when it filed for bankruptcy protection.

Then known as WCI Steel, the company was sold to Severstal in a union-approved deal in 2008. In the same year, the USW approved the sale of Sparrows Point from ArcelorMittal to Severstal.

Following the near shutdown of the three mills by Severstal – which has invested heavily in its non-USW-represented mills at Dearborn, Mich., and Columbus, Miss. – the union has demanded that the company sell the properties.

The USW International insisted that any bidder must purchase Severstal Warren, Severstal Sparrows Point and Severstal Wheeling in a package deal, which excluded several potential buyers, including Argentine steelmaker Ternium.

If Renco is successful in purchasing Sparrows Point, it is not known whether it will start up the steelmaking furnaces, which were idled by Severstal in late July.

Currently about 1,300 of the 1,800-strong union workforce at the Baltimore County mill are on layoff as a result of what Severstal calls adverse market conditions.

Clarification: We previously reported that Optima Fund, another bidder for the Severstal properties, was associated with Ukranian mining magnate Rinat Akhmetov. A spokesperson for Akhmetov, Anna Terekhova, said that Akhmetov has “transferred all of his business to System Capital Management” and that SCM and Akhmetov have no business relationship with Optima.

Reach Mark Reutter at reuttermark@yahoo.com.