By Jamie Smith Hopkins and Steve Kilar, The Baltimore Sun
1:12 PM EDT, July 31, 2012
The auction for RG Steel's Sparrows Point steel mill, expected today, will be delayed by a week.
Attorneys for the company, which is in bankruptcy protection, confirmed Tuesday morning that the sale was not underway as originally planned. An attorney for Kinder Morgan, one of the major creditors, said the auction had been rescheduled to next week.
Jerry Conners, president of the United Steelworkers Local 1223 in Yorkville, Ohio, said he was told RG Steel's Wheeling, W.Va., assets were being auctioned off Tuesday. His understanding was that auctions for the Sparrows Point and Warren, Ohio, facilities were both delayed to allow a primary bidder — known as a "stalking horse" — to come on board.
RG Steel, which filed for Chapter 11 protection at the end of May, originally had the option to identify a stalking-horse bidder by 5 p.m. Monday, according to a June order signed by Delaware federal bankruptcyJudge Kevin J. Carey, who is overseeing the bankruptcy. No document requesting approval for such a bidder is available through online court records.
U.S. steel firmNucor Corp., Ukrainian mining and metallurgy company Metinvest Group, and Brazilian steel giant CSN submitted bids last week for the Baltimore County steelmaking site, according to a source with knowledge of the bankruptcy proceedings. The source declined to be named because the bid process is confidential.
About 2,200 people worked at RG Steel's Sparrows Point mill, though most have been laid off since the bankruptcy was announced. In addition to steel, the Sparrows Point plant also made tin cans.
RG Steel bought Sparrows Point from Severstal in March 2011 and lost $324 million in its first six months of operation, according to court filings. Within a year of owning the plant, RG Steel was looking to sell, and eventually the company filed for bankruptcy protection.
Michael Locker, a New York steel industry consultant, said last week that he would be surprised if the Sparrows Point facility was not sold, mainly because of its prime port location and skilled workforce. But he cautioned that a new owner might not restart operations immediately because of the current low global demand for steel products.
Two weeks ago, the company was allowed by Carey to pay multimillion-dollar bonus packages to 10 executives. The company's request angered elected officials and was condemned by the U.S. Trustee Program, a division of the Department of Justice that oversees bankruptcy administration.
Sen. Barbara A. Mikulski announced last week that she was co-sponsoring a bill to limit excessive compensation for executives of bankrupt companies.
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