NEW YORK Severstal U.S.
Holdings LLC has asked a federal bankruptcy court judge in
Delaware to relieve a stay motion that is keeping it from
enforcing a lien on RG Steel LLCs security interest in
Mountain State Carbon LLC.
RG Steel owes and is liable to
Severstal for $100.7 million, an amount that is more than the
value of the bankrupt steelmakers stake in the Mountain
State Carbon operations, Wilbur Winland, vice president and
general manager of Severstal North America Inc.s
Columbus, Miss., mill, said in an affidavit filed in support of
the motion. Winland is also co-controller of Mountain State
Carbon, a 50-50 joint venture between RG Steel and Severstal
The request centers on a
$100-million promissory note dated March 31, 2011, that RG
Steel issued to Severstal. In the note, RG Steels
Wheeling, W.Va., operation pledged and granted security
interest in all of its rights, title and interest in the
Follansbee, W.Va., coke-making operations, Severstal counsel
said in court documents. RG Steel still owes the principal
amount of the note to Severstal, plus interest, Severstal
RG Steel relinquished its
operating control and equity stake during bankruptcy
proceedings, Severstal said in the documents.
While the Chapter 11 bankruptcy
code does not allow creditors to enforce liens as debtors
reorganize their operations, RG Steel is no longer a
steelmaker; therefore, the Sparrows Point, Md.-based
companys interest in the coke-making operations at
Mountain State Carbon are no longer necessary to that
reorganization, Severstal claimed in the court documents. "The
debtors have largely concluded the process of liquidating their
assets, including all of their steelmaking facilities. The
facilities were sold to liquidators or scrap operations, and
there is no indication that any of the facilities will operate
again. The debtors are in the process of selling their few
remaining assets and raw material inventory. They are not
currently operating as a business and do not intend to do so in
Furthermore, RG Steels
search for a buyer in its stake in the joint venture has been
unsuccessful, Severstal said. RG Steel "provided several
potential purchasers with access to financial and operational
due-diligence materials, including sensitive operating
information, as well as in-person tours of the MSC (Mountain
State Carbon) facilities and MSCs management personnel.
Notwithstanding the debtors efforts, to Severstals
knowledge no offer has been received."
The motion is set to be heard by
Judge Kevin J. Carey Jan. 15.
A Severstal spokeswoman declined
to comment. RG Steel counsel did not return calls for
A local United Steelworkers
union representative told AMM that negotiations with
Severstal NA to establish a new contract at Mountain State
Carbon, which is currently running half of one of its coke
batteries, are still ongoing.