RG Steel Files for Bankruptcy, Esmark Offers to Buy Wheeling Corrugating
06/01/2012 - RG Steel LLC and its wholly owned subsidiaries announced that they have filed petitions under Chapter 11 of the United States Bankruptcy Code with the U.S. Bankruptcy Court for the District of Delaware.
RG Steel LLC and its wholly owned subsidiaries announced that they have filed petitions under Chapter 11 of the United States Bankruptcy Code with the U.S. Bankruptcy Court for the District of Delaware. RG Steel was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Md.; Wheeling, W.V.; and Warren, Ohio. John Goodwin, CEO of RG Steel, commented, “Despite the company’s aggressive cost reduction efforts, significant improvements in its cost structure, and substantial investment capital, the company has been unable to overcome the impact of the continued deterioration of the market and the inability of the industry to sustain a meaningful recovery.”
After a thorough analysis of the company’s liquidity position and extensive consideration of available alternatives, the company, after consultation with its advisors, concluded that a voluntary Chapter 11 filing provided the most prudent and effective means of maximizing the value of our core business. “By voluntarily filing for Chapter 11, we will have the opportunity to use the court-supervised process to implement an orderly asset preservation plan and explore other options, including soliciting offers to purchase all or certain of the company’s assets. We have already begun a sales process aimed at maximizing value for all stakeholders and preserving the jobs created when RG Steel acquired these facilities” Goodwin stated.
In conjunction with the filing, the company has filed a number of first day motions that will allow it to transition into a bankruptcy process in an orderly manner. Those motions include requests to make wage and salary payments and continue other employee-related programs.
Notably, any joint venture in which the company has an interest will continue to conduct business as usual and will not be subject to the company’s bankruptcy case.
The company has retained Willkie Farr & Gallagher LLP as its legal advisor, Conway MacKenzie Inc. as its financial advisor and The Seaport Group as its lead investment banker.
In related news, Sewickley, Pa.-based Esmark Inc. submitted an offer to acquire RG Steel's Wheeling-Pittsburgh headquarters in Wheeling, W.Va., along with certain assets of the Wheeling Corrugating business.
After a thorough analysis of the company’s liquidity position and extensive consideration of available alternatives, the company, after consultation with its advisors, concluded that a voluntary Chapter 11 filing provided the most prudent and effective means of maximizing the value of our core business. “By voluntarily filing for Chapter 11, we will have the opportunity to use the court-supervised process to implement an orderly asset preservation plan and explore other options, including soliciting offers to purchase all or certain of the company’s assets. We have already begun a sales process aimed at maximizing value for all stakeholders and preserving the jobs created when RG Steel acquired these facilities” Goodwin stated.
In conjunction with the filing, the company has filed a number of first day motions that will allow it to transition into a bankruptcy process in an orderly manner. Those motions include requests to make wage and salary payments and continue other employee-related programs.
Notably, any joint venture in which the company has an interest will continue to conduct business as usual and will not be subject to the company’s bankruptcy case.
The company has retained Willkie Farr & Gallagher LLP as its legal advisor, Conway MacKenzie Inc. as its financial advisor and The Seaport Group as its lead investment banker.
In related news, Sewickley, Pa.-based Esmark Inc. submitted an offer to acquire RG Steel's Wheeling-Pittsburgh headquarters in Wheeling, W.Va., along with certain assets of the Wheeling Corrugating business.
As part of its offer, Esmark said in a statement it is working with the United Steelworkers, which represents 4,000 RG Steel workers, including about 2,000 in Wheeling and Warren, Ohio. Esmark said it hopes to close on its asset purchase within the next 45 days.
RG Steel is the nation's fourth-largest flat rolled steel producer. Wheeling Corrugating is the nation's leading fabricator of roll-formed steel products.
The company listed Severstal US Holdings II Inc., based in Dearborn, Mich., as its single largest unsecured creditor, with a claim of $36.5 million. Other unsecured claims include $22.4 million by Mountain State Carbon LLC of Follansbee, W.Va., and $15.7 million by Ballie Steel PLC of London, England.
RG Steel said in court papers that its steelmaking operations are most attractive to potential purchasers as a going concern, and that a restructuring would be best for all parties, including its employees.
Additional information regarding the company’s bankruptcy case can be found at http://www.kccllc.net/RGSteel.RG Steel was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Md.; Wheeling, W.Va.; and Warren, Ohio.
