The auction for RG Steel's Sparrows Point steel mill, expected Tuesday, will be delayed by a week.
The sale of the Baltimore County facility as well as RG Steel's assets in Warren, Ohio, is now scheduled for 10 a.m. next Tuesday in New York.
Attorneys for the company did not give a reason for the delay in a court filing Tuesday, other than to say that RG Steel officials are authorized to postpone the auction as they "deem appropriate" if major creditors agree.
The auction for RG Steel's assets in the Wheeling, W.Va., region went forward Tuesday as planned, though results were not available as of early evening.
Jerry Conners, president of the United Steelworkers Local 1223 in Yorkville, Ohio, said his understanding was that auctions for the Sparrows Point and Warren facilities were delayed to allow a primary bidder — known as a "stalking horse" — to come on board.
Delaware federal bankruptcy Judge Kevin J. Carey had approved a sale schedule that called for an auction Tuesday if a stalking-horse bidder had not emerged by Monday afternoon or as late as Aug. 21 if a stalking-horse bidder did appear Monday.
Chuck Bradford, a metals analyst with New York-based Bradford Research, said he didn't understand what a week's delay would accomplish, "but maybe there is something going on," he said.
"It could be that one of the potential buyers has a board of directors problem, just getting the board together to get approval," Bradford said. "It could be they need some governmental approvals. Maybe there's some customers they want to contact. There's just a lot of possibilities."
The U.S. steel firm Nucor Corp., the Ukrainian mining and metallurgy company Metinvest Group, and Brazilian steel giant CSN submitted bids last week for the steelmaking site, according to a source with knowledge of the proceedings. The source declined to be named because the process is confidential.
Analysts were surprised by Nucor's interest because the company doesn't have unionized employees — unlike RG Steel — and uses a different manufacturing process. Nucor CEO Daniel R. DiMicco said in a 2010 conference call with analysts that he saw "a host of issues that would make us be very concerned and wary of actually being involved in an acquisition" of Sparrows Point.
Bradford said he doesn't believe the Charlotte, N.C.-based Nucor would want to operate Sparrows Point, but he said the company might be interested in purchasing the cold rolling mill there and putting it in one of its own locations.
Or, Bradford said, "they may just have wanted the commercial intelligence of who Sparrows Point is selling [steel] to."
Nearly 2,000 employees at the Sparrows Point mill have been laid off in recent weeks as the facility was idled. An added 1,000 people — employees of contractors, vendors and suppliers, many of them in Maryland — have lost their jobs or are set to lose them as a result of the idling, the Baltimore County Department of Economic Development estimated.
"It is a huge ripple," said Edward Fangman, chief of the agency's division of workforce development.
The division is hiring an employee to help people who lost their jobs as a result of the RG Steel bankruptcy. Even if the mill is purchased by a company that intends to restart operations, it could be a while before workers are back on the job, Fangman said.
He said he was happy to hear about the extra time for an auction. But he's had to guess at the reason for the postponement, despite his efforts to keep in touch with union and company officials.
"We're in an information vacuum here," Fangman said.
Conners, too, was in the dark. The union leader in Yorkville, where cold rolling work is done for RG Steel's Wheeling arm, said he was waiting by the telephone Tuesday for word on the auction of the Wheeling-area assets. As of late Tuesday, he hadn't yet heard whether someone had bought them.
"I'm hoping to find out something," he said.
Baltimore Sun reporter Steve Kilar contributed to this article.
twitter.com/RealEstateWonkCopyright © 2015, CT Now