RG Steel seeks approval of procedures for the sale of company's assets

By Jim Witters

Wilmington, Del., June 5 - RG Steel, LLC is seeking approval of procedures for the sale of substantially all of the company's assets, according to documents filed Monday with the U.S. Bankruptcy Court for the District of Delaware.

The company operates three main steel producing plants in Sparrows Point, Md., Warren, Ohio, and Wheeling, W.Va. In addition, the company owns facilities in Mingo Junction, Martins Ferry and Yorkville, Ohio, and a specialized corrugating division in Wheeling.

RG Steel hired Sea Port Group Securities, LLC as its investment banker and began marketing the assets before filing its bankruptcy petition, according to court documents.

"There has already been significant interest in purchasing the debtors' assets. The company has currently entered into a sizable number of confidentiality agreements, with several more potentially interested buyers considering entering into them, as well," according to court documents.

One potential buyer expressed interest in becoming a stalking horse bidder, and negotiations are under way, the filing states.

DIP milestones

Under the debtor-in-possession financing facility, RG Steel is required to submit a sale order by July 17, with a sale closing by July 27.

If a purchase agreement for the Sparrows Point plant is accepted and submitted to the DIP agent, the sale order deadline can be extended to Aug. 4 and the sale closing to Aug. 14.

Bid procedures

The proposed bid procedures include:

• Authorization to negotiate a stalking horse bidder agreement, including breakup fees and expense reimbursements;

• All bids must be received by noon ET three business days before the scheduled auction;

• All bids must be accompanied by a 2% cash deposit;

• Potential buyers may bid on all or some of the assets, but the bidder must submit a separate purchase agreement for each asset;

• The minimum incremental bids will be 0.5% to 1.5% of the starting bid; and

• If a stalking horse bidder has been identified, the minimum bid increments will be at least equal to the amount required by the stalking horse bidder's overbid protection.

A hearing to approve the sale procedures is scheduled for 11 a.m. ET on June 21.

An auction, if needed, will be scheduled for 10 a.m. ET on July 12 and July 13.

The sale hearing is scheduled for 11 a.m. ET on July 18.

Sale proceeds

The net proceeds of any sale will be remitted directly by the successful bidder to the DIP agent, then to the senior prepetition agents and then - after payment of professionals' fees - to the debtors' estates, the court filings state.

RG Steel, a Sparrows Point, Md., flat-rolled steel processor, filed for bankruptcy on May 31. The Chapter 11 case number is 12-11661.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.