YOUNGSTOWN CSC lenders want equipment sale
THE VINDICATOR, YOUNGSTOWN
A CSC attorney said a company is interested in operating part of the plant with a smaller work force.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- CSC Ltd.'s lenders are asking for an October auction of the mill's equipment because no buyer is in sight.
Ronald Hanson, a lawyer for the lenders, said in U.S. Bankruptcy Court today that lenders have spent $1.6 million in June and July to keep the plant on idle and have approved spending $950,000 for August and September.
Judge William Bodoh was hearing arguments from the lawyers this morning concerning whether to hold an auction or to continue to look for a buyer to operate the Warren steel bar company.
Hanson said he was skeptical of interest expressed by Renaissance Partners, a management buyout firm. He said the company, which expressed interest in the mill in July, has not made a definite offer and won't give details of financing arrangements.
Concerned about value: Hanson also said that the value of the mill's equipment has dropped by half since spring. He said a report that will be filed with the court will show the value of the assets has dropped by millions of dollars.
He said buyers of the mill's equipment have been scared off by the delay in approving an auction.
Matthew Goldman, an attorney who represents CSC, said there is a company interested in operating part of the mill and using between 150 and 200 employees. He also said that CSC officials believe Renaissance Partners has a sincere interest in operating the entire mill.
Judge to rule: The judge was to rule today on a request by unsecured creditors to convert the case from Chapter 11 of the federal bankruptcy code, which calls for a company to reorganize, to Chapter 7, which calls for liquidation and distribution of sale proceeds to creditors.
Atty. Mark Hebbeln, who represents unsecured creditors, said a trustee appointed in a Chapter 7 case would be able to evaluate if potential bidders for the plant are sincere.
"Conversion to Chapter 7 is the only hope for this mill ever operating again," he said.
The judge, however, said he was concerned that converting the case would add an extra layer of costs and would eliminate tax advantages available in Chapter 11 cases.
The mill has been closed since April, but company officials continued the search for a buyer who would re-open the mill and preserve at least some of the 1,300 jobs.
No buyer for the entire mill has stepped forward.
Auction canceled: An auction was to be held July 12 but was canceled because there was no interest.
Hopes were renewed earlier this month when Renaissance Partners, with offices in Cleveland, Pittsburgh and Detroit, said it was heading up a group of experts who were trying to put together a business plan.
Firm officials said investors were lined up and ready to restart the mill if they could be persuaded that CSC would be a money-maker.
Investors were likely to spend about $50 million for the mill and ramp it up for production, Renaissance officials said.
Creditors, who financed a $100 million modernization project at the mill in recent years, have said they expect to lose about $50 million in the case.
Michael Fox International, a Baltimore-based auctioneer, has been working since May to prepare the mill for dismantling and a piece-by-piece sale.
CSC had 13 profitable quarters from October 1995 through December 1998, but it started losing money in 1999 and was unable to find new operating capital in the face of lenders' growing reluctance to lend to steel. It filed for bankruptcy protection in January.