Horsehead Industries Files For Ch. 11

Horsehead Industries Inc., which produces and also recycles zinc from steel plants, on Aug. 19, filed for bankruptcy protection.

Horsehead filed for Chapter 11 with the U.S. Bankruptcy Court for the Southern District of New York in Manhattan.

Horsehead, majority owned by Riverside Management Group, defaulted on its bank facility with J.P. Morgan Chase & Co. and failed to capture new financing after global zinc prices plunged to their lowest level in more than 100 years and put pressure on the U.S. market, according to the company's Chapter 11 filing.

Horsehead listed $215.6 million in assets and about $231.2 million in total liabilities in its petition. Three of its subsidiaries also filed for bankruptcy, said James Carpenter Jr., Riverside president.

Horsehead is scheduled to appear in court Aug. 21 to seek the use of cash collateral for 45 days and to consolidate its filing with the separate filings of the three subsidiaries, Carpenter said.

"We were seeking to renegotiate our credit facility but, in general, were unable to reach an agreement with our bank group and filed because we weren't able to both operate and meet both interest payments," he said. "We've been restructuring for the past several months and have enough cash to meet payroll and hope to fully restructure by sometime in the fourth quarter without the need for DIP [debtor-in-possession] financing."

Purchase, N.Y.-based Horsehead and its subsidiaries are the largest zinc makers in the U.S. with $200 million in revenue and more than 1,000 employees.

Carpenter said the company primarily sells its goods in the U.S. Horsehead contracts with more than 50 steel companies in the U.S. to extract the high zinc content from the hazardous waste produced during steelmaking via an electric arc furnace. From that waste byproduct Horsehead makes zinc metals, powders and oxides, according to its filing. The Deal