May 19 UPDATE: RG Steel’s Jerry Nelson says “everything’s on the table” and “people have expressed interest” in buying RG Steel plants, according to Wheeling, W.Va., newspaper. Also, scrap dealers reluctant to sell to Sparrows Point and Warren, says American Metal Market. [See AMM story below in Comments.]
Industry newsletter Steel Market Update reports that the owner of Sparrows Point has been in talks with Brazilian steelmaker CSN in an effort “to find a raw materials partner or even sell the company.”
Meanwhile, a small number of layoffs will begin at Sparrows Point next week. Informed sources report that about 35 union workers will be furloughed in the cold mill owing to a steep drop in customer orders.
RG Steel has not announced the layoffs, but they will be posted internally.
The SMU report confirmed a Brew story Monday night quoting union officials saying that RG Steel, which owns mills at Sparrows Point, Warren, Ohio, and Wheeling W.Va., is up for sale. The Brew reported that “it’s been widely rumored that [RG Steel] is seeking a buyer from overseas.”
Brew sources have also cited CSN (Companhia Siderúrgica Nacional) as a potential partner or buyer of Sparrows Point, as RG Steel faces a liquidity crisis among unpaid vendors, a downturn in orders and bank investors eager to withdraw their funds from the company.
RG Steel Says Company is Stable
The Brew’s report was met by a push-back by the company. Jerry Nelson, general manager for commercial, wrote a carefully worded statement to SMU that the company had not discussed a sale of its plants with the union, had the support of its customers and did not face an unusual problem with liquidity.
In a story today in TribToday.com in Ohio, RG Steel spokesperson Bette Kovach reiterated that RG Steel hadn’t “asked the United Steelworkers to find a buyer for its plants,” sidestepping the question of whether the company was involved directly in negotiations with one or more potential buyers.
According to unnamed sources cited in the SMU report, “CSN has not made any decisions about the RG Steel assets, which include Warren, Wheeling and Sparrows Point steel mills, or to even enter into a closer commercial relationship with RG Steel.”
Rebuffed by Union
“We were told there were various obstacles to any deal, including issues with the union which had spurned them in the past,” the newsletter added.
In 2002, following the bankruptcy of Bethlehem Steel Corp., the United Steelworkers rejected CSN’s offer to buy Sparrows Point. The plant was eventually sold to International Steel Group (ISG), which was subsequently purchased by ArcelorMittal, then Severstal, and now RG Steel.
Kovach did not immediately respond to a request for comment by The Brew. In her response to TribToday, she touted RG Steel’s “self-help internal efforts” that have reduced manufacturing costs, she said, and laid the groundwork for a positive cash flow in six months.