Loan Falls Through for Geneva Steel

Geneva Steel, which was hoping for $250 million in financing to allow it to reopen as a mill capable of using ferrous scrap as a raw material, announced that negotiations have ended. In a statement Geneva says it is unlikely that another potential investor will step forward with a financing package to allow the company to continue to operate. The company has been in Chapter 11 bankruptcy protection since this January.

The company, located in Vineyard, Utah, had hoped that financing from Deutsche Bank would allow the company to repay debt of around $100 million, as well as help it finance an electric arc furnace for $80 million.

According to local press reports the company and Steelworkers Local 2701 intend to make one last effort to interest Deutsche Bank in underwriting the loan that would be 85 percent guaranteed by the U.S. government.

Despite a final attempt, the company said it does not believe that a replacement lender can be found in time to meet the deadline. In the event that an application is not filed, the company has agreed to work with its secured lenders to formulate a plan of reorganization that is acceptable to the secured lenders. Such plan will likely provide for a liquidation of the Company either in place or in parts. Absent further agreement with the Company’s secured lenders for access to cash collateral, the company will lack sufficient liquidity to continue its limited operations beyond November 15.