Sparrows Point auctioned to liquidators—with ties to RG Steel
Published: August 15, 2012
Bankrupt RG Steel’s Sparrows Point steel mill complex was auctioned to equipment liquidator Hilco Industrial, on Aug. 7 for $72 million. The Baltimore Brew found financial ties between Cerberus Capital Management, the “white knight” venture capital fund that gained a 24.5 percent stake in RG Steel last year by lending the company $220 million, and Hilco’s parent company, Hilco Trading. Cerberus and Goldman Sachs, together, took a 33-percent stake in that company in 2006.
A hearing to approve the sale is scheduled for Aug. 15. Bankruptcy rules forbid insiders in a bankrupt company from bidding on the company’s assets, but because Cerberus and Hilco are private companies, it is was unclear as of press time if they are still connected.
The low price for the giant steel mill was a blow to the 2000 or so laid-off workers as well as the plant’s creditors. The plant was valued above $1 billion and holds inventory worth more than $200 million, according to court records. The bid winner must wait at least six months before dismantling the plant in order to give the union and other stakeholders a chance to find another buyer who would keep the plant running.
Meanwhile, Baltimore County residents filed a lawsuit against RG and a nearby cement plant, claiming that pollution from the companies contaminated their property and damaged their health. Their suit follows a legal claim by the Chesapeake Bay Foundation and other environmental groups seeking to force RG (or its successor) to step up water pollution control around the plant.