Privately held U.S. zinc producer Horsehead Industries Inc. said it had withdrawn a proposed plan from bankruptcy court to sell its core assets to U.S. Zinc Corp. after the potential buyer said negotiations had reached an impasse.
A Horsehead Industries spokesman said that U.S. Zinc, a unit of IMCO Recycling Inc., had indicated that it was no longer interested in becoming the leading bidder for the purchase of Horsehead's assets out of bankruptcy.
With the plan off the table, the door opened for other buyers interested in Horsehead, the biggest zinc producer in the United States which operates primarily as Zinc Corp. of America, said the spokesman.
"There is more than one prospective buyer in the wings. We're working with one right now to complete an asset purchase agreement which is hopefully going to be submitted to the court very shortly," he said.
The sale agreement withdrawn this week called for U.S. Zinc to pay $6.3 million in cash and $13 million in promissory notes and to assume $30.7 million in obligations to banks and other creditors, according to court filings.
A spokesman for U.S. Zinc was not immediately available to comment Wednesday afternoon.
The Horsehead spokesman declined to name other parties currently involved in negotiations and said it was unclear when any sale would actually take place.
"Being in bankruptcy is expensive, but we're still operating and we have every plan to continue until we can get an asset purchase agreement in place, have the auction and have the assets sold," he said. "At that point we'll be able to emerge from bankruptcy."
In Aug. 2002, Horsehead and its subsidiaries filed for protection under Chapter 11 of U.S. bankruptcy code to reorganize its heavy debt while continuing to produce zinc despite low world metal prices.
The company has warned in recent court filings that it could be forced to shut down if a sale were not quickly concluded.
Parent company Horsehead Industries is based in New York. Its Zinc Corp. subsidiary is based in Monaca, Pennsylvania. Overall, Horsehead employs more than 1,000 people in seven states.
Horsehead already has an agreement to sell its Balmat zinc mine in New York state. Balmat has been on care-and-maintenance since 2001 due to depressed zinc markets.
In May, Canada's Ontzinc Corp. OTZ.V agreed to buy the mine for $20 million, with plans to restart production.
The top U.S. zinc producer, Horsehead is also the world's largest recycler of zinc bearing materials, producing more than 165,000 short tons of zinc products and recycling more than 450,000 tons of electric arc furnace dust annually. Reuters
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