WILMINGTON, DEL. – A U.S. bankruptcy judge this evening approved the sale of the venerable Sparrows Point steel mill to a liquidating company and brownfield property developer.
The agreement was reached after Hilco Industrial and Environmental Liability Transfer Inc. agreed to increase its purchase price from $72 million to $72.5 million.
The added money will be placed in escrow to pay for an investigation of offshore pollution by the mill. That stipulation satisfied the U.S. Environmental Protection Agency, the Maryland Department of the Environment and the Chesapeake Bay Foundation, which earlier objected to the sale.
The buyers also agreed they would be responsible for any hazardous materials that migrate from the mill property into Baltimore harbor after the sale.
The court did not act on an 11th hour bid by a Dallas company to buy the mill for $82 million. That company had said it planned to keep at least one of Sparrows Point’s operations open.
A lawyer for Hilco, the winning bidder, said the company is interested in finding operators for parts or all of the now-closed Baltimore County facility, which has been making steel since 1891.
Tonight’s statement to the court was the first time Hilco has publicly said they might “market” all or part of the property and seek out operators. The company’s traditional business is the removal and resale of industrial equipment.
Yorkville Sold; Warren and Wheeling Corrugating Postponed
The bankruptcy court approved the sale of the Yorkville, Ohio, plant to Esmark Steep Group for $5.15 million. The closing of the sale is dependent on several factors, but is expected to take place by August 24.
The court postponed the sale of RG Steel Warren to C.J. Betters, a property development company, and Wheeling Corrugating’s equipment to Nucor Corp to a August 23 hearing.
The delay in the Warren sale was due to an easement issue brought up by lawyers of the Arcelor-Mittal steel company. The various parties of the dispute said the issue should be resolved by the August 23 hearing, so the sale to Betters can be finalized.
Here’s our earlier post:
SB International, a Dallas-based steel distributor, offered a last-minute bid for Sparrows Point – and said it would keep one of the Point’s mill’s operating – at a sale hearing today before U.S. Bankruptcy Judge Kevin Carey.
A lawyer for SBI said they offered bankrupt RG Steel $82 million, or $10 million more than the bid by Hilco Industrial and a St. Louis property developer, which was accepted at the Aug. 7 auction of Baltimore’s largest industrial employer.
SBI pledged to operate “one segment” of the Sparrows Point mill but would not guarantee employment for the current workforce represented by the United Steelworkers Union.
The company did not name the segment it wanted to operate, but the most modern operation there is the New Cold Mill, which opened in 1999.
But SBI’s bid was immediately challenged by lawyers representing RG Steel’s senior lenders and Cerberus Management, the junior lienholders, who asked why SBI did not bid at a Aug. 7 auction.
Judge Carey expressed skepticism about the SBI bid. He postponed today’s hearing until 4:30 pm, so a final deal could be worked out with Hilco.
The Hilco group’s agreement with RG Steel permits it to end all current labor agreements.
The federal EPA, Maryland Department of the Environment and Chesapeake Bay Foundation had urged that the Hilco group pay for an offshore study of pollutants from the steel plant and assume liability for any cleanup.
Bill Sullivan, a lawyer for Environmental Liability Transfer Inc., part of the Hilco bidding group, told Judge Carey that Hilco “did not price into its bid” the cost of investigating or remediating offshore pollution. He said the company would fix environmental problems at the plant itself.
The Hilco group’s pledge to spend $500,000 on the offshore study, and to take responsibility for harbor pollution that occurs after the sale, apparently sealed the deal.