CHICAGO — Seamless tube and cold-finished bar producer Optima Specialty Steel Inc. has been unable to obtain funding for its proposed $112.5-million acquisition of special bar quality (SBQ) and merchant bar quality flats producer Kentucky Electric Steel LLC (KES), putting the deal in jeopardy.

Miami-based Optima is committed to finding financing, both companies said Monday, adding that neither party had exercised its right to stop the acquisition.

"We are disappointed that our financing efforts have not succeeded as quickly as we had all hoped, but we continue to pursue various potential financing options that would enable us to complete this transaction, which we believe is a great fit for both companies," Optima chief executive officer Kevin Stevick said in a statement.

If Optima doesn’t obtain financing by Feb. 28, the company must pay KES a termination fee of $3,375,000, the companies said. In the meantime, Ashland, Ky.-based ALJ Regional Holdings Inc., KES’ parent, still plans to hold a special shareholders meeting on the deal Dec. 21.

The companies said they couldn’t estimate when the proposed merger might close, given the uncertainty surrounding financing, as well as other closing conditions. The companies had expected the deal, announced in November, to close this month (amm.com, Nov. 20).

Optima plans to modify KES’ facilities to make SBQ rounds, the feedstock needed to produce SBQ flats as well the seamless tubular products manufactured by Michigan Seamless Tube LLC and the cold-finished bar products made by Niagara LaSalle Corp. (amm.com, Nov. 26), the two companies that were brought together to form Optima (amm.com, Dec. 13, 2011).