Bankruptcy Court Mulls Fate of Steel Company

The fate of Republic Technologies International's Chicago and Harvey plants and one of its locations in Gary are being decided in the Akron, Ohio, bankruptcy court determining the successful bidder for the company's assets.

The company reviewed almost a dozen bids for RTI's assets earlier this week.

"It could be that the companies were bidding against one another," he said, adding the company would not release any information on the bids or bidders until the bankruptcy court determined the winning offer.

In May, RTI Acquisition Corp. -- comprised of KPS Special Situations Fund L.P. and Hunt Investment Group L.P. -- had received first-offer protection from the bankruptcy court, giving it "stalking horse" status with a definitive asset purchase agreement of $450 million. RTI had asked the court to grant the designation to protect its debtor in possession financing.

At that time, there were at least three competing offers for RTI's assets with the others coming forward before the July 2 deadline. The bids vary in scope from those for significant portions of the assets, to individual plants, to parcels of property, according to the company.

Joseph F. Lapinsky, president and chief executive officer, said while decisions on the company's future are made, RTI will continue to operate its facilities and serve its customers "under business-as-usual conditions."

"As soon as decisions are made, we will communicate promptly with our customers, employees, suppliers, union official and leaders of the communities where we operate," he stated in a news release. "We appreciate the support we have received from all of these groups over the past year, and we look forward to assuring a smooth transition."

According to a report in the Akron Beacon Journal, the company hopes the hearing will be concluded July 11th, although it is unlikely that the judge in the cast will enter a court order until Friday.

The KPS/Hunt proposal offers $450 million for about 60 percent of Republic's assets. It would preserve about 2,500 of 4,000 jobs.

The bondholders' credit bid of $425 million would use the same assets, plus rolling mills at Lorain and Massillon, and employ about 2,450 people. That proposal also calls for divesting cold-finished steel operations within the first year, a move that Republic maintains could cost 500 jobs.

The bondholders would employ former Republic Executive Vice President Robert L. Meyer and other former Republic managers to run the company. Meyer testified focusing the assets on bar production would in the long run preserve more jobs.

RTI is the nation's largest producer of high-quality steel bars. In addition to its local plants, the company has facilities in Canton, Massillon, and Lorain, Ohio; Beaver Falls, Pa.; Lackawanna, N.Y. and Hamilton, Ont. It has nearly 4,000 employees and 2001 sales of approximately $1 billion.