NEW YORK At least two
parties were said to have expressed an interest in buying and
operating parts of the former RG Steel LLC Sparrows Point, Md.,
steelmaking facility prior to the sale of one of its top assets
earlier this quarter.
A United Steelworkers union
official confirmed to AMM that two groups had
expressed interest in operating at least some of Sparrows
Points production facilities before news broke that Nucor
Corp. had bought equipment from the sites cold mill for
amm.com, Dec. 12).
According to the union official,
one interested party was Pittsburgh-based iron and steel
equipment supplier Sherman International Corp.
The union official declined to
comment further, but AMM has been told that Sherman
had submitted a letter indicating initial interest by a Nov. 12
deadline set by auction firm Hilco Trading LLC, which purchased
the entire Sparrows Point complex and land with Environmental
Liability Transfer Inc. for $72.5 million at the bankruptcy
amm.com, Aug. 16).
Had it bid for and won the
assets, Sherman had intended to operate at least portions of
the facility, sources familiar with the situation said. The
company was said to have been planning to submit a formal bid
by Dec. 21.
Sherman had also considered
partnering with New Delhi-based Jindal Steel & Power Co.,
sources said. Sherman declined to comment, while Jindal
didnt return AMMs calls.
The union official said the
other interested group was led by a former Severstal North
America Inc. executive and organized by Seaport Group LLC, the
New York investment bank hired to facilitate the bankruptcy
auction after RG Steel filed for Chapter 11 protection in May
amm.com, May 31). Seaport Group didnt
respond to a request for comment.
Gary C. Epstein, chief marketing
officer at Hilco Trading, declined to comment on specific
companies reportedly interested in the assets but told
AMM the company did not deny any interested parties
the opportunity to bid.
The rumors that Hilco
rejected or dismissed any offers or interested parties to
acquire part or all of the Sparrows Point mill without review
or consideration are simply unfounded. All interested parties
were put through a fair due diligence process and all qualified
parties were seriously considered, he said in an
Talk that at least two companies
had been planning to make a play for the assets comes just one
week after Charlotte, N.C.-based Nucor bought a portion of the
cold mill complexincluding the pickler, tandem mill and
parts of the annealing furnacesfor parts and upgrades at
its existing facilities.
The cold mill has been
highlighted as one of the most attractive parts of the
facility, with market players suggesting the rest of the assets
will be hard-pressed to find a buyer if the state-of-the-art
cold mill isnt part of the package (
amm.com, Dec. 13).
As a result, some market players
have called Nucors move a strategic one, since it could
keep a competitor out of the market for good.
But Nucor president and chief
operating officer John Ferriola told AMM that taking
out a possible competitor wasnt the steelmakers
"Sparrows Point operated in our
territory for 30, 40 years, so were used to that," he
said when asked about possible competition from a new operator.
"We were there for the last 25 years, we competed with them and
we never fear competition."
Ferriola said that he was
unaware if there were any other bids for any or all of the
Sparrows Point facility, but noted that the equipment fit
Nucors needs for upgrades at its existing mills.
"We saw an opportunity to buy
parts and equipment at a reasonable price," he said
The remaining production assets,
which had originally been scheduled to go to auction Jan. 3
alongside the cold mill, will now be sold through a private,
negotiated sale process, Hilco said last week.