Republic agrees to pay cure amounts to Kobe Steel, objection dropped

By Carlise Newman

Chicago, Dec. 16 - Republic Engineered Holdings Inc. will pay cure amounts to Kobe Steel Inc., which will withdraw its objection Republic's sale of assets to Perry Strategic Capital Inc. under an agreement confirmed by the U.S. Bankruptcy Court for the Northern District of Ohio.

Kobe objected to Republic's attempt to assign license agreements. Republic has since agreed that the unpaid amounts under the license agreements between it and Kobe - $71,028 under the technology and trademark agreement and $110,880 under the technology transfer agreement - must be paid if they become due before the agreements are assumed by the buyers of Republic, according to a court filing. Republic has already paid $86,960 to Kobe.

Under the transaction with Perry, Perry will assume Republic's responsibility to pay the cure amounts due. Under that transaction Perry will also continue the operations of Republic's Lorain plant and will keep Republic's management in place - and does not plan to include representatives of Kobe's competitors in the management.

In return for these conditions, Kobe agreed to withdraw its objection to the sale.

Under Republic's sale agreement with Perry, a minimum portion of the purchase price will be allocated to its bank lenders, and will include $87.2 million in cash.

The purchase price will also include $14.3 million, the maximum under Republic's debtor-in-possession loan; and $21 million of 10% notes due 2009, secured by a first lien against Canton Cast Roll.

Insurance proceeds in excess of $25 million will be payable to PAV Republic.

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