WILMINGTON, Del. - RG Steel LLC, which employs about 1,100 at its steel mill in Warren, has reached an agreement with its unsecured creditors committee to extend the sale of the bankrupt steelmaker's assets.
RG Steel told bankruptcy court Judge Kevin Carey on Thursday that it had resolved several objections from other creditors, including the Pension Benefit Guaranty Corp. The PBGC had objected to the bidding procedures because they failed to take into account whether a bidder was willing to assume any of RG Steel's pension liabilities.
The revised bidding procedures require qualified bidders to state whether they intend to assume all or any of the pension plans sponsored by RG Steel Warren or RG Steel Wheeling. They also state that the factors to be used in valuing a bid will include any benefit to the bankruptcy estate of assuming pension liabilities.
The PBGC said assumption of pension plans covering some 1,381 employees and retirees, with an estimated unfunded liability of about $70 million, could reduce PBGC's bankruptcy claims against RG Steel and improve employee morale.
An initial bankruptcy financing agreement with secured lenders who are owed some $450 million and have liens on most of RG Steel's assets required a quick sale process, including selling a steel mill in Sparrows Point, Md., by July 27.
Unsecured creditors expressed concern that the process was being rushed, arguing that more time could result in higher bids for RG Steel's assets and help avoid a potential "fire sale" that would undervalue the assets.
On Thursday, attorneys for RG Steel and the creditors committee told the judge in the bankruptcy case that the sale timeline will be extended by about two weeks.
"This is not a company that a year would be an appropriate time to sell, on the other hand 60 days felt quite tight," said Matthew Feldman, an attorney for RG Steel.
The original plan was that on July 16, bids entered by proposed purchasers were to be opened and awarded. All sales were to close by July 27.
Under the revised plan, the bankruptcy financing agreement will end on Aug. 10 instead of July 27. If RG Steel secures a lead or "stalking horse" bid, its bankruptcy financing would automatically be extended to Aug. 24, allowing 10 more days than the previous extension date.
"Aug. 24 is our absolute drop-dead date to have a sale to close," said RG Steel attorney Shaunna Jones.
Jones told the judge that qualified bids for RG Steel's assets would be due by July 25, and that the company would have until July 30 to designate a stalking horse bidder. If no such bidder is identified, an auction would be held the next day. If a lead bidder is designated, the auction would be pushed back until Aug. 21.
Privately held RG Steel is the nation's fourth-largest flat-rolled steel manufacturer. It sought bankruptcy protection in Delaware last month, citing liquidity issues attributed to low steel prices and high raw material costs. The bankruptcy filing came a week after RG announced that it would idle factories in Maryland, West Virginia and Ohio and lay off thousands of workers.
In Warren, 263 union workers at RG Steel's mill were laid off June 1 as the plant finished filling customer orders before being shut down. The mill's primary end - blast furnace, basic oxygen furnace and continuous caster - were idled then.
Another 287 hourly Warren workers at were laid off June 8, taking the total hourly furloughs to 550, United Steelworkers Local 1375 President Darryl Parker said. That left 190 union members still active as the mill continued to be gradually shuttered due to declining orders and its own Chapter 11 bankruptcy.
Parker said 38 salaried workers also were laid off, pushing the total new hourly and salary layoffs at the mill to 325 and overall total to 588 since the first round was announced June 1. About 80 salaried workers are still on the job, with another dozen or so on vacation, he said then.