The massive Sparrows Point complex changed ownership Friday for the fifth time in less than a decade, potentially its last sale as a steel mill.
The new owners, redevelopment firm Environmental Liability Transfer and liquidator Hilco Trading, paid $72.5 million for property that sold for $810 million just four years ago. About 2,000 people worked at the mill before seller RG Steel idled it after filing for bankruptcy in late May, and they were stunned that no steelmakers bid at the August auction in New York.
But the new owners say they would like to find an operator to restart part or all of the Baltimore County complex.
"Both ELT and Hilco would love to see a continued steel facility at Sparrows Point," said Randall Jostes, Environmental Liability Transfer's president and CEO. "The market will dictate whether that's possible."
He said he's open to selling the entire complex to a steelmaker but sees "plenty of room" to redevelop part of the site while a steelmaker uses the rest. If there's no interest from the steel industry, the site would be fully redeveloped.
The end result for Sparrows Point could be more jobs, not fewer, Jostes said
"We definitely think the deep-sea port capacity makes it an ideal location for future industrial pursuits, as well as distribution-type approaches," Jostes said. "The potential exists for tens of thousands of jobs based on the superior location, the demographics, the good workforce in the area and the deep-sea port."
Among the interested parties: the Maryland Port Administration, which is in talks to potentially acquire the property's Coke Point as a dredge material containment site.
ELT acquired the real estate and just over 1 million square feet of what it deems reusable buildings — the 12-year-old cold mill and some of the warehouses. Hilco acquired the rest, including equipment and other buildings "that might be associated with ongoing steel manufacturing," Jostes said.
Hilco will market the site. It's not clear how long the company will try to find a steelmaker. Gary Epstein, Hilco's chief marketing officer, said it will take a few weeks just to evaluate all options for a property so big and complex that even its size is uncertain. Hilco put the number at 3,400 acres. ELT believes it's closer to 3,100.
"We certainly think that the state-of-the-art cold rolled mill complex is a really rare asset, and the deep-water port as well has great potential for the right operator," Epstein said.
Joe Rosel, president of United Steelworkers Local 9477 in Sparrows Point, wants to help the new owners market the mill but said he hasn't been able to speak to the companies' officials. That could change now that the deal is done.
"I hope to have a meeting as early as possible next week," Rosel said. "We need to start the process."
Illinois-based Hilco handles plant closings and a raft of other work, such as appraisal, property acquisition and going-out-of-business sales for retailers.
ELT and sister company Commercial Development Co., both based in St. Louis, have acquired property across the country and "alleviated" more than $1 billion in environmental liabilities. Projects include former coal mines, an aluminum smelter and many manufacturing plants — some cleaned up and leased back to their former owners, some redeveloped.
"Liability is our business," ELT says on its website.
The company has plenty to keep it busy at Sparrows Point. The site's size and location — south of Interstate 695, nearly surrounded by water — are enough to make any developer's mouth water, but it comes with toxins.
"More than a century of steel making and finishing operations have resulted in perhaps the most complex environmental cleanup site in the Chesapeake Bay watershed," Baltimore County's attorneys wrote in court documents.
Jostes, with ELT, said the cleanup will take "many, many, many years," but the site can be used while that work is under way.
He pointed to the company's acquisition of a bankrupt Missouri brick factory in 2005 as a project with a similar scope. The 2,500-acre property is "up and running and producing brick once more," Jostes said.
But that's not the usual result.
"We generally acquire assets that really aren't suited for ongoing use, so the Sparrows Point site is unique in that regard," he said.
Seller RG Steel, which bought Sparrows Point and other steel mills just last year, filed for bankruptcy in May, blaming market conditions for its rapid descent.
The $72.5 million price its Sparrows Point facility brought at auction shocked workers and some steel analysts.
"I've always felt this is a viable mill," said Michael Locker, a consultant with the New York-based Locker Associates. "It's very hard for me to believe that nobody [from the industry] would show up to buy it. … It's a great bargain."
The auction was held 10 weeks after RG Steel filed for bankruptcy, a timeline Locker called "super-accelerated." Hilco told the bankruptcy court that the timeline was "not as long as it could have been," but Jostes said the price was market value.
"The right sum was paid for the present condition of the site and the present condition of the steel industry," he said.