RG Steel receives court approval for bid procedures, final DIP facility

By Jim Witters

Wilmington, Del., June 22 - RG Steel, LLC received approval for bid procedures for the sale of substantially all of its assets and final approval for its $500 million debtor-in-possession financing facility, according to documents filed June 21 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.

DIP financing

RG Steel obtained a commitment from Wells Fargo Capital Finance, LLC for up to $50 million of DIP financing in conjunction with its bankruptcy filing.

The company said the facility also removes reserves previously imposed on its existing credit facility.

In addition to the $50 million of supplemental loans, the facility includes up to $450 million of revolving A loans under the existing facility and $25 million of revolving B loans from the existing facility.

Interest on supplemental loans and revolving A loans will be the base rate plus 250 basis points. Interest on revolving B loans will be 13%.

DIP changes

In the final order:

• The maturity date of the facility was moved to Aug. 10 from July 27;

• The potential extension date was moved to Aug. 24 from Aug. 14;

• A non-professional fee administrative claim reserve of $1 million was established; and

• The outstanding advances and letters of credit are capped at $400 million during the period of June 15 through July 5; $300 million from July 6 through July 26; $150 million after July 27; and $125 million after Aug. 10.

Milestones in the amended DIP agreement include:

• A July 30 deadline for a stalking-horse asset purchase agreement;

• If no stalking horse emerges, an auction for the Sparrows Point facility must be conducted by July 31, with a sale approved by Aug. 8 and closed by Aug. 10; and

• If a stalking-horse bidder emerges for the Sparrows Point facility, the auction must be conducted on or before Aug. 21; the sale order must be entered before Aug. 23; and the deal must close by Aug. 24.

Bid procedures

Under the procedures approved June 21:

• Lenders may submit credit bids;

• The bid deadline is noon ET on July 25;

• An auction, if needed, is scheduled for 10 a.m. ET on July 31;

• A stalking-horse bidder may be identified on or before 5 p.m. ET on July 30;

• If a stalking-horse bidder is identified, the auction will be at 10 a.m. ET on Aug. 21;

• The sale hearing is scheduled for 1 p.m. ET on Aug. 8 if there is no stalking horse; and

• If there is a stalking horse, the sale hearing will be scheduled for 10 a.m. ET on Aug. 23.

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

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