A judge in Wilmington, Del., approved the sale of the Sparrows… (Baltimore Sun photo by Barbara…)
WILMINGTON, Del. — — A federal bankruptcy judge approved Wednesday night the sale of the Sparrows Point steel mill for $72.5 million to a redevelopment firm working with a liquidation company, but the buyers said the plant might not be dismantled.
Hilco Trading, an Illinois liquidator purchasing the property with St. Louis-based Environmental Liability Transfer, told the judge that it would market the mill to potential operators — exactly what the steelworkers' union vowed to do itself in an effort to save Sparrows Point and its 2,000 jobs.
"We recognize that the sale process was maybe not as long as it could have been," said Eric W. Kaup, Hilco's general counsel. "We are interested in finding operators who will reopen parts or all of the mill.
"We understand that people have lost jobs, and we are interested in seeing if we can find operators that can help people go back to work. It's in our interest to find those operators."
Randy Jostes, president and CEO of Environmental Liability Transfer, said he shared that sentiment.
"If mill operators are to be found, we'd like to find them," he said. But either way, he added, "we think this site has a vibrant future."
The parties resolved complex issues involving the site's environmental problems Wednesday. The buyers agreed to pay $500,000 more than their winning bid of $72 million, with the extra funds going into an escrow fund. That money will pay for efforts to investigate the waters around the mill to see if steel-making toxins have migrated from the property.
Judge Kevin J. Carey, who is overseeing the sale, did not take up the issue of a surprise offer made earlier in the hearing by one of the unsuccessful bidders. Dallas-based steel distributor SB International Inc. said that after the recent auction it offered mill owner RG Steel $82 million — $10 million more than the highest bid — for the bulk of the property.
Victoria Counihan, an attorney for holding companies owned by SB International Inc., said the company "would agree to operate at least one segment of the mill." SB International officials said in a telephone interview Wednesday that they were able to rally additional investors and make a higher offer after the auction.
"At this point I don't believe the debtors are accepting this offer, but my client wanted to make sure the court was aware that what we believe is a substantially greater offer is on the table," Counihan said.
Both RG Steel and Environmental Liability Transfer objected to what they termed a last-minute offer after the auction.
Most of the handful of participants in last week's auction specialize in redevelopment. Environmental Liability Transfer's attorneys said in the court hearing that the auction for Sparrows Point and RG Steel's plant in Warren, Ohio, lasted 171/2 hours — from 8:30 a.m. the morning of Aug. 7 to the early hours of the following day.
Chris Rausch, an attorney for Environmental Liability Transfer, said during the hearing that SB International's chance to buy had come and gone at that auction.
"They were there, they had the opportunity to make the higher and better bid … and they did not," he said. "They chose not to. I would just object … and ask that our bid be confirmed."
The $72 million sale price perplexed steel analysts when it was revealed last week. The mill sold for $810 million — more than 10 times as much — just four years ago.
The United Steelworkers — which represents workers at the mill — and local government officials said shortly after the auction that the process had been too speedy for potential mill operators. The sale was held just 10 weeks after RG Steel filed for bankruptcy protection. Advocates vowed to seek a company that would purchase the plant and reopen Sparrows Point.
Joe Rosel, president of United Steelworkers Local 9477 in Sparrows Point, said Wednesday night after the hearing that he was glad both purchasers said for the record that they too wanted to market the property to operators.
He said he's hoping to meet with the companies to hammer out a more formal agreement to work cooperatively on that effort.
"I welcome the chance to get the plant sold to a strategic steelmaker so we can get everybody back to work," Rosel said.
About 2,000 people worked at the plant before it was idled following RG Steel's May filing for bankruptcy-law protection.
Until the layoffs, Sparrows Point was one of Baltimore County's largest private employers. Once it was the largest in the state, a behemoth that supplied steel for the Golden Gate Bridge, the Chesapeake Bay Bridge and hundreds of ships for World War II.
Baltimore Sun reporter Gus G. Sentementes contributed to this article.