Sale deadline unrealistic, expert says

Lawmakers urged laid-off steel workers to lobby state officials to support a financial package for the mill.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- Consultants studying the potential for a successful turnaround of CSC Ltd. say there's no way a sale can be accomplished in time for an April 13 deadline, even though the mill is in excellent condition.
Michael Locker, the New York City consultant whose firm was hired to evaluate the steel bar plant and its potential for success under a new buyer, said a $93 million CSC plant modernization project was well designed and equipment has been well maintained.
He argued that the deadline CSC's lenders have set for the intact sale of the mill is "totally unrealistic," however, because it would likely take up to three months to finalize such a large deal with a new buyer.
"The banks call it a worthless mill ready for the scrap heap," Locker said, addressing the press and a crowd of laid-off CSC workers Friday.
State of things: "I want to say clearly that it is not. This equipment is in the state and ability to restart. It is not ready for the scrap heap. The banks are totally wrong in their analysis, and it is absolutely essential that we find a way to save it."
Locker was responding to statements made by lenders' attorneys who said Thursday that the banks don't believe the company can be sold intact. They told Judge William T. Bodoh in U.S. Bankruptcy Court that lenders think they'll get more out of the mill by selling it piece by piece.
CSC filed for Chapter 11 bankruptcy protection in January and has been winding down operations. Less than 100 of its 1,300 employees are working, and the plant stopped processing steel a week ago.
Locker emphasized the importance of state, local and federal government support in putting together a financial package to attract a buyer for the mill.
State Rep. Anthony A. Latell Jr. of Girard, D-67th, said his proposal for using interest from Ohio's rainy-day fund to back a federal Emergency Steel Loan Guarantee program would go a long way toward providing that package. CSC was approved for a $60 million loan guarantee under the program last fall.
Latell said CSC was unable to find a lender, despite the guarantee, because banks argued the federal program had too many loopholes. His proposal would add the state's backing to give lenders more protection, Latell said.
Gov. Bob Taft has refused to meet with Latell and other local lawmakers to discuss the plan, saying that it would require legislative action.
Action urged: Latell urged CSC employees attending Locker's presentation to stage a telephone, e-mail and letter-writing campaign, asking the governor and other state officials to support his plan.
He argued that the governor's support for the plan would mean a lot, since the state's House and Senate are led by Republican majorities.
"If they would just agree to support it, the judge would be able to consider extending the April 13 deadline," Latell said. "It gives the judge a common-sense reason to give us an extension."
Locker's report noted that CSC was profitable and had a unique position in the special-quality steel bar market before its financial problems began about a year ago and has the potential to regain that position under a new buyer.
CSC was unique in its market, producing 800 varieties of steel in a wide range of sizes and finishes, and consultants believe its customers would welcome its return.
Locker said an employee-led buyout is not the best solution, however, because of the cost and risk.
Cash problems: CSC will need between $35 million and $50 million in capital to re-establish its customer base and fund the operating losses associated with a prolonged start-up.
Better solutions, he said, would be an outright purchase of the mill by another business, or a deal pairing investors with CSC workers as the minority partner in an employee stock ownership plan.
Locker was hired by CSC employees, largely to study the feasibility of an employee buyout of the plant. The $30,000 study was paid for by a grant from the Ohio Department of Jobs and Family Services.
He will offer to continue working with the company to help find a buyer for the mill and said he thinks the Cleveland office of McDonald Investments has done "an inadequate job" on the search.
Company attorneys have said that six potential buyers have expressed some interest, and Local 2243 officials have said they have two potential partners investigating a purchase plan.