Liberty Steel Group, part of a conglomerate owned by British-Indian industrialist Sanjeev Gupta, said Monday it has been named as the "preferred buyer" for Bayou Steel in LaPlace, which was put into bankruptcy in September by its Connecticut-based hedge fund owner.
Liberty said in a statement Monday that it expects to pay $28 million, assuming it clears all the hurdles to buy the company out of bankruptcy court in Delaware. The judge overseeing the case said Monday she expects to approve the deal, pending some small changes to the agreement.
Bayou Steel was put into Chapter 11 bankruptcy at the end of September by owner Black Diamond Capital Management, subsequently ceasing operations with the layoff of all 376 local workers and about 100 elsewhere in the country.
Liberty said it also plans to acquire the rolling mill operation in Tennessee and Bayou Steel's depots in Catoosa, Oklahoma; Leetsdale, Pennsylvania; and Chicago.
The deal is expected to be completed by the end of January. Liberty "has developed a plan to upgrade and modernize" the mill, restart recycling operations in the second-half of next year and steel-making by early the following year, it said in a statement. The company has pledged to invest $90 million to upgrade the business, the court filing said.
A spokesman for Liberty said it is too early to comment about how many jobs will be created, or whether any former Bayou Steel workers could expect their jobs would be reinstated.
The 40-year-old steelworks, which specialized in recycling scrap steel, owed up to $100 million to about 2,000 creditors, including local suppliers and service providers. It had less than $50,000 in liquid assets available, according to Black Diamond Capital Management's filing in September.
The company had just signed a new deal with the United Steelworkers union to hike pay by 4% in the first year and 3% in each of the subsequent two years.
Gupta, 47, was born in India but was raised largely in the U.K., where he studied economics at Cambridge University and began commodities trading while still in college.
He has gained a reputation in the past few years for resuscitating shuttered steelworks. His first purchase was a defunct steel plant in Newport, in Wales, then later another in Rotherham, in northern England, and two years ago the Whyalla steel mill in south Australia. Last year, he bought several plants in Europe from Arcelor Mittal, the world's largest steel-maker, and his steel group now employs about 45,000. The company made some small acquisitions in the last two years in Illinois, Ohio, New Mexico and South Carolina.
According to his spokesman, the group's strategy is to become the world's first totally carbon-free steel producer as it converts to renewable energy sources for all production. In Australia, for example, it is building the world's largest solar farm to power Whyalla, while it is focusing on wind sources in the U.K.
There are no such plans for Bayou Steel in the immediate future, he said.
The company's statement quoted Grant Quasha, the North American head of Liberty's parent company, saying: “Our immediate focus will be on restoring the steel recycling supply chain and operations at the facility. Once fully upgraded and operational the business will bring our total production capacity in the U.S. to 3 million tons per annum, moving us closer to our target of an aggregate 5 million tons of steel production in the U.S.”
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December 24, 2019 at 05:11AM
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Bayou Steel could restart steel-making in LaPlace by 2021 under potential new owner - NOLA.com
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