CHICAGO — Charter Steel Trading Co. Inc. appears to be involved in the pending acquisition of bankrupt Indiana Steel & Tube Inc., according to sources familiar with the matter as well as bankruptcy court documents and other records.
According to Innisbrook Equity Group managing principal Jacques Hopkins, whose firm served as the broker in the auction, Chicago-based Charter Steel Trading created the company E&H Tubing Inc. to bid on Brownstown, Ind.-based Indiana Steel & Tube.
In late October, a bankruptcy court judge in Indiana approved E&H Tubing’s purchase of the bankrupt company for nearly $5.7 million (amm.com, Nov. 1).
Hopkins, whose firm specializes in merger and acquisition work for distressed companies, said that steel companies like Charter were interested in Indiana Steel & Tube because steel accounts for the majority of the cost of producing steel tubing.
"If a steel company can put itself in the dominant position of perhaps becoming the sole-source supplier, there is an obvious advantage in that," he said. "It’s not just the margin that Indiana Steel & Tube makes itself on the tubing. You’ve also got the margin from the additional sales of steel, which you perhaps wouldn’t otherwise get."
Charter Steel Trading president Gary Birnbaum is listed as a contact for E&H Tubing in the asset purchase agreement for Indiana Steel & Tube, court documents show.
Additionally, the asset purchase agreement, filed in a bankruptcy court in Indiana, lists E&H Tubing’s address as 4401 West Roosevelt Road in Chicago. That is the same address as Charter Steel Trading, which was among the top unsecured creditors in the case and was owed $900,259 when Indiana Steel & Tube filed for bankruptcy (amm.com, July 11).
The purchase agreement is also signed by Birnbaum, who is listed on the document as president of E&H Tubing.
However, when asked whether Charter Steel Trading might involved in the acquisition, Birnbaum told AMM in an e-mail that "you got this all wrong." He did not respond to additional requests for comment and declined to comment further until he was at "liberty to discuss."
E&H Tubing was incorporated Oct. 9, according to records from the office of Illinois Secretary of State Jesse White.