With no lead bidder, Sparrows Point set to go to auction tomorrow
The absence of a “stalking horse” bidder strikes a blow at hopes for resuming steel operations.
Above: Whether the Sparrows Point blast furnace, one of the world’s biggest, will ever resume operations should be determined at tomorrow’s auction.
The tightrope walk facing Baltimore’s biggest industrial facility – between resumption of operations and permanent closure – continued today as no lead bidder emerged as a potential buyer of the Sparrows Point steel mill.
As a result, the huge Baltimore County facility, plus a second mill at Warren, Ohio, are headed for the auction block tomorrow morning, where anything can happen.
About 15 bidders – mostly demolition companies and equipment auctioneers – have filed the paperwork that enables them to bid on the properties at the Manhattan law offices of Willkie, Farr & Gallagher, attorneys for bankrupt RG Steel.
The Brew has identified two foreign steel groups and one domestic steelmaker that can bid at the auction. But whether they will step forward is unknown. The current owner of RG Steel, Ira Rennert, also has a chance to bid on the properties.
Blow to Reopening Hopes
The absence of any lead, or “stalking horse,” bidder to emerge by today’s court deadline is a serious blow to efforts by the United Steelworkers Union and others to keep Sparrows Point and Warren – or at least parts of the mills – open.
Sparrows Point employs 1,600 USW workers and about 400 in management. Hundreds of additional people in Baltimore are employed by suppliers and subcontractors at the mill, which has been in financial turmoil for several years.
Nearly all personnel have been laid off – and production was suspended in June pending the outcome of a sale of the assets of RG Steel.
Establishing a stalking horse bidder would not only have set a baseline price for the mills, but also would have indicated that one or more bidders were interested in returning the facilities to production.
Fire Sale
At a similar auction held last week, RG Steel’s Ohio Valley steel assets sold for a pittance. Two large facilities (Wheeling Corrugating and Mingo Junction) are expected to be emptied and demolished.
Three smaller finishing mills may stay open – Yorkville and Ohio Coatings, purchased by Esmark Steel Group, and Martins Ferry, purchased by two local businessmen. Earlier, the Steubenville, Ohio, facility was purchased for scrap.
Tomorrow’s auction is not open to the public or press. Disclosure of the highest bidder for each mill (and any back-up bids) is not expected until mid-week.
U.S. Bankruptcy Court Judge Kevin J. Carey has set August 15 as the court date when he will review and most likely approve the asset sales.