RTI Considers Closing Plants

Three area Republic Technologies International LLC plants are expected to close under a tentative purchase agreement between the bankrupt steel bar maker and its buyer.

The plants slated for closing are Gary, Ind.; Harvey, Ill.; and Chicago.

 Dave McCall, director of District 1, United Steelworkers of America, said, "Those plants will remain part of Republic Technologies, which will liquidate," McCall said. "The new company doesn't want them and they'll probably eventually close."

Last week, RTI announced it signed a non-binding letter of intent to sell its assets to RTI Acquisition Corp., which is a new corporation formed by KPS Special Situations Fund L.P. and Pegasus Partners II to acquire bankrupt Republic. The estimated value of the KPS/Pegasus transaction, including cash and the assumption of liabilities, is approximately $450 million

Fairlawn, Ohio-based RTI, which is the nation's leading supplier of specialty bar quality steel, has been operating under bankruptcy protection for about one year. The company operates plants in Ohio, Pennsylvania, New York, Cartersville and Ontario as well as the plants in Chicago and Harvey and two plants in Gary.

The company has set a May 31 target date to obtain bankruptcy court approval for the sale and finish the transaction. The bankruptcy code gives other entities the opportunity to buy the company through a bidding process supervised by the court.

RTI Acquisition Corp. plans to consolidate the company's cold finished bar facilities to three locations from the six currently operating. The Gary plant and the Harvey plant are among the three that won't be part of the consolidation.

The Chicago plant isn't being purchased because the company leases rather then owns the property and -- because of its location -- its cost of doing business is extremely high, said Mike Millsap, subdistrict director, of USWA District 7.

There's always a chance that the plants not included in the tentative purchase plan could be acquired by a new company, Millsap said.

The new company could be successful despite the poor state of the steel bar business, McCall said.

"The bar business has been in trouble since mid '80s but they won't have pension and legacy costs," he said. "Those are big dollars and big savings. And they're picking the plants they can make profitable."  The Times (Munster, Ind.)