RG Steel extends beyond valley
From Warren, Ohio – through the heart of the Ohio Valley – east to Sparrows Point, Maryland every one of the steel industry assets sold at auction recently by now bankrupt RG Steel is unique, as are the challenges now being faced by the steelworker who have brought these fire breathing dragons to life over the decades – one shift at a time.
Sparrows Point – (Baltimore County, Maryland)
The steel making assets at Sparrows Point, Maryland which were only recently put up for auction and sold to the highest bidder in federal bankruptcy court by then owner RG Steel, are already for sale again.
Interested parties have until December 21 to file a bid through HRE Sparrows Point LLC, the business entity established to move forward with transactions tied to that site by Hilco Industrial LLC, one of the two parties to the successful joint bid entered with the federal bankruptcy court which is handling the ongoing Chapter 11 reorganization of RG Steel.
Potential purchasers are welcome to enter bids on any part of the resources there, from a single item being sought or a purchase of the entire mill and will its resources.If an auction is needed, it will be held on January 3, 2013.
This latest ownership change saw the diverse array of assets at Sparrows Point being picked up for $72,500,000.; a number which at first glance sounds impressive on its own but when compared to the price tag paid for the same site four years ago it is clear something is drastically different in the equation today.
In 2008, a successful purchase of the Sparrows Point works was made by OAO Severstal when it bought the complex from then owner Chicago-based, Esmark paying $810 M for a deal which included this site and others .
The massive facility at Sparrows Point, Maryland – just outside of Baltimore – was once the largest steel mill in the world, and housed the largest blast furnace in the nation, the now famous “L” furnace.
Many of the men and women who had been employed at the mill under RG’s ownership were the most recent generation of their family to become part of the legendary operation’s workforce of steelworkers.
The bankruptcy driven closing and auction under RG Steel’s ownership is decimating lives of the 2,000 or more individuals who had been employed there, and the ripple effect is beginning to be seen in the surrounding community as regular paychecks reflecting hard-earned wages no longer infuse the local economy.
Though there are already families needing help from such organizations as community food banks, there may still be a glimmer of hope connecting to a future there involving some aspect of steel production.
Hilco’s new director of marketing, Gary Epstein, has said there have already been inquiries made by interested parties, some of whom are steel operators.
As far as Hilco is concerned, Epsetin said, there could be no better outcome of the current effort than to be able to sell the assets there to an operator.
The purchase at auction of the Sparrows Point mill and its expansive resources came through a joint venture involving Hilco Industrial LLC of Northbrook, ILL and Environmental Liability Transfer Inc. of St. Louis, Missouri.
Hilco focused on purchasing the above grade improvements, machinery and equipment.
ELT’s purchase included the 3,400 acre Sparrows Point site and certain reusable buildings. The St. Louis based company also assumed certain specified environmental liabilities connected to the property, according to court filings.
Following the closing of the sale on Sept. 14, 2012, ELT and Hilco SP LLC participated in a joint press release addressing future plans, beginning with affirming their commitment to aggressively seek connections to possible operating venture investors.
“At this time, we are evaluating all of our options for the property, which include seeking operators for the mill in its entirety or some of the many manufacturing facilities and operations within the 3400 acre site. We are considering removal and resale of industrial equipment and structural demolition followed by environmental remediation of the site as a precursor of redevelopment,” said the jointly released Sept. 14 press statement.
It is worth noting the property purchased at the auction is considered valuable in part for its “rare access” to a deepwater port, something of unique interest at this point in time due to the new supersized ships soon to be passing through the Panama Canal on a regular basis.
The mill itself has a dedicated port area with ready access to the Atlantic.
The mill’s port is also able to provide docking for deep-water vessels.
The site itself is considered especially attractive to a broad scope of possible development avenues, as it sits on the edge of the Chesapeake Bay and at the mouth of the always busy Baltimore Harbor.
RG Steel Warren – the mill itself – marked a prestigious benchmark in May of this year when its 100th anniversary was celebrated – a point of continuing pride, though somewhat bittersweet at the moment.
More recently it was sold during RG Steel’s chapter 11 reorganization based court auction – a process intended to generate cash to help offset large business related debts of the steelmaker’s.
The mill’s place in this nation’s industrial history was fixed with its contributions to the tubing industry and the automotive industry.
The Warren assets held by RG Steel were sold to C.J. Betters Enterprises, Inc. for approximately $17M.
A commitment made by Betters in the sale document filed with the court appears to reflect his professional and personal commitment to doing everything possible to ensure it will have been well maintained over the course of the coming winter, with an eye toward getting it operational on some scale.
The language of the sale document reflects a commitment by Betters establishing a nine month period following the closing during which he will not remove or sell any assets used as of May 15, 2012 – or for 60 days prior – in the steel production process up through and including the hot strip mill “so that subsequent purchaser of the facility who intends to operate the facility as a going concern may operate the assets.”
Darryl Parker is president of USW Local 1375 in Warren.
He has logged 31 years of work at the Warren mill and a total of 44 years in the steel industry, having come to work at what was most recently called RG Steel Warren after having worked a number of years for U.S. Steel.
An element of the business conducted at this plant under previous ownership has been built on its ability to offer an array of specialty steel products made with top quality consistent levels of craftsmanship.
The new owner of the mill, C.J. Betters Enterprises Inc. is headquartered in the Aliquippa and Monaca, Pa. areas, and is led by Charles Betters.
Betters has gone on record recently noting he would prefer to see the future of the Warren mill resting in the hands of a skilled and knowledgeable operator who could re-connect it to a productive life.
Published reports have described Betters and his professional resources as being well established when it comes to attempts to develop high profile properties and projects.
Of key concern to the Warren area steelworkers is whether or not the mill will be winterized, and when that would happen.
Parker said Betters has recently committed to winterizing the facility and its workings in an effort to stave off or at least reduce the possible destruction that could take place if protective measures are not taken soon within the mill complex.
Though most of the former RG Steel employees being helped these days at the USW local in Warren were hourly, resources and access to information for the workforce is not being made exclusively to salaried staffers as well as USW members, shared Parker.
Assets were sold at auction to C.J. Betters Enterprises, Inc. with the sale being completed on Sept. 25, according to court records. This was the second time the steel mill and its resources were connected by ownership to New York based Billionaire Ira L. Rennert, the man at the center of all things RG Steel.
Court records indicate the business identity for the newly purchased assets will be known for the immediate future as BDM Warren Steel Holding LLC.
Loccisano can be reached at email@example.com