WARREN Dispute arises over CSC purchase
An auctioneer's spokesman said a Youngstown developer's offer was never accepted.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- For months nobody wanted CSC Ltd. -- now the idle steel mill is the unlikely focus of a battle between two would-be buyers.
A Youngstown developer with several industrial projects to his credit locally said he signed a purchase agreement last month to buy the land and buildings the Warren steel bar mill occupies.
That's why Bill Marsteller was shocked about news reports Wednesday that a Ukrainian group bought the 400-acre Mahoning Avenue N.W. property for $1.2 million this week.
Marsteller would not divulge the amount of his bid, but he said he had offered to pay more than $1 million and to accept the successorship clause that would recognize the United Steelworkers of America on the site. He said he will take legal action if his attorney determines that his rights were violated.
Surprised: Meanwhile, CSC executive Don Caiazza said he was surprised to learn about Marsteller's claim.
Caiazza broke the news that a group of Ukrainian investors who paid $6 million for two of CSC's largest and newest pieces of steelmaking equipment in late October had agreed to buy the real estate as well.
He noted that the investors, who formed a Delaware company called Warren Steel LLC to make the purchase, had the approval of CSC's lenders for the deal. The investors have made no commitment to operate any part of the mill and Caiazza could not identify them, but he said they definitely have the assets to buy and develop the property.
"Nobody would want to sell it twice," he said, "If it's a complication I guess somebody will have to work it out and find out who's right and who's wrong."
Louis Goldberg, a spokesman for Baltimore-based auctioneer Michael Fox International, which was hired to sell the mill equipment and real estate, said the foreign investors' offer was accepted, and Marsteller's was not.
The confusion will be resolved, he said, when the purchase agreement is filed in U.S. Bankruptcy Court in Youngstown, probably next week.
The auction: CSC was one of the region's largest employers when it filed for Chapter 11 bankruptcy protection in January, and about 1,275 workers were left jobless when the mill ran out of money and ceased operations in April.
Bankruptcy Judge William Bodoh ordered a piecemeal auction of the mill after an unsuccessful, 12-month search for a buyer to keep the facility operating intact.
Marsteller said he was in Fort Lauderdale, Fla., when the auction began and had arranged to participate by bidding online. When he tried to bid on the real estate, however, he ran into technical problems and the bid didn't register.
The developer said he immediately called the Michael Fox representative handling the sale and spent about two hours negotiating a price over the phone and made a $100,000 deposit. Auctioneers offered the real estate for sale again the second day of the auction, he said, but there were no other bidders.
Michael Fox faxed him a purchase contract, Marsteller said, and he signed and returned it. In the contract he agreed to pay $200,000 in back taxes, to accept responsibility for environmental problems on the site and to accept the union successorship clause.
Explanation: Goldberg, the auctioneer spokesman, said Marsteller made his offer and deposit outside the parameters of the auction, as did several other prospective buyers. That gave the lenders the right to choose the offer they thought was the highest and best.
But even if the bid had been made at the auction, Goldberg said, the real estate sale was the one thing Judge Bodoh had stipulated was subject to confirmation of the lenders and the bankruptcy court.
"There was no signed contract and no signed agreement" with Marsteller, Goldberg said.
Bought cranes: Marsteller said he bought several cranes on the second day of the auction, planning to use them in redeveloping the mill property.
He said he has a potential industrial tenant in Pittsburgh which could occupy about 500,000 square feet. He also planned to negotiate with the foreign investors who bought the continuous caster and the melt shop in hopes of persuading them to leave the equipment in place and operate it on site.
"I don't want to discredit Don Caiazza. Maybe I'll be getting an education in auction law, but I feel like my rights are being violated," Marsteller said. "I always thought that when you bid on property at an auction, it wasn't so someone else could come along a few weeks later and bid more."
Other projects: Marsteller said he's well known in the Mahoning Valley as a successful developer.
Youngstown City Council recently approved a lease-purchase deal for Marsteller under which he will renovate the old B & amp;O Station on Mahoning Avenue and rent space there for a brewery and restaurant. His other local industrial development projects include the old General Fireproofing building in Youngstown, a Commercial Intertech plant on Andrews Avenue, the ITT Grinnell building in Warren and part of the U.S. Steel mill property in McDonald.