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 Tubings 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. "Its not just the margin that Indiana Steel
& Tube makes itself on the tubing. Youve also got the
margin from the additional sales of steel, which you perhaps
wouldnt 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
Additionally, the asset purchase
agreement, filed in a bankruptcy court in Indiana, lists
E&H Tubings 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
E&H Tubing was incorporated Oct. 9, according to records
from the office of Illinois Secretary of State Jesse White.