CSC LTD. No sale: Investor loses interest in mill

One manager said there's still hope some parts of the plant can reopen.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- Beleaguered CSC Ltd. is on its way to the auction block now that a regional management buyout firm has decided to drop its plans to revive the shuttered steel mill.
Renaissance Partners, which emerged two months ago as a possible savior for the darkened steel bar production plant, announced Friday afternoon it had canceled an effort to reopen the mill after "expending an enormous amount of time and performing careful due diligence."
"The world has changed since Sept. 11, 2001, and unfortunately our equity sources have been deluged with more compelling opportunities to invest in distressed assets," said Leo Keevican Jr., managing director.
"While we recognize that this is a significant setback for the former employees of CSC and the broader Warren community, the investors have simply decided to invest elsewhere."
Filed Chapter 11: CSC was Trumbull County's fourth largest employer before it filed for Chapter 11 bankruptcy protection in January. About 1,375 employees were idled when the mill halted operations in April.
Renaissance Partners works with equity partners who invest in troubled companies that can be bought at a deep discount, then turned around to become profitable again, Keevican explained. The terrorist attacks Sept. 11 forced many struggling manufacturers and steel companies into even deeper financial trouble, expanding the field of opportunity for the investors.
Besides, the investors had a deadline to meet. Judge William Bodoh of the U.S. bankruptcy court in Youngstown had given CSC and Renaissance Partners until the close of business Monday to find a buyer willing to purchase the mill as a whole operating unit.
If no bidder came forward by that deadline, CSC would have permission to proceed with an auction to sell the plant piece by piece.
"We had several hurdles to get over: no labor contract yet, no commitments from customers, and the court deadline," Keevican said. "With all those issues, together with many other opportunities, we just decided not to hold people's hopes up any longer."
But Don Caiazza, CSC vice president of sales and one of only 12 employees still working at the mill, said there's still hope that some part of the facility will be purchased and reopened before an auction is held.
Previous offer: Ellwood Group Inc., a privately held, family owned metal fabricating business based in Ellwood City, Pa., offered $2.4 million in July for CSC's thermal treatment and finishing operations. The offer, filed in court July 9, was not accepted at the time because the company wanted to find a buyer willing to buy and operate the plant as a whole.
Caiazza said Michael Fox International, a Baltimore-based auctioneer, has been working since May to prepare the mill for dismantling and piecemeal sale, but he estimated it will probably take a few more weeks to finalize plans for the auction. He guessed the event will be scheduled by late October.
Meanwhile, Judge Bodoh has given prospective buyers the option to bid on equipment or to make offers on parts of the mill prior to the auction. Caiazza said he's hopeful that Ellwood Group Inc. will come forward again, and that others might also consider reopening part of the idled mill.
"If we can't save it all, maybe we can find someone to save part of the plant for Warren," he said.
Keevican said that, contrary to broadcast reports, Renaissance Group's investment partner will not be offering to buy a part of the plant. Investors were interested only in buying the mill as a whole, he said.
Caiazza, who worked closely with Renaissance Partners in its effort to sell CSC to a private equity group based in New York, said he accepts Keevican's explanation. "I'm disappointed, of course, but I fully agree that the impact of the events of Sept. 11 definitely cast a negative shadow on this deal," he said. "If they were on the fence, if they were at all uncertain, this pushed them over the other way."
Contract talks: Caiazza and Keevican agreed that talks had been progressing with the United Steelworkers of America and its Local 2243, which represents CSC workers, although no agreements had been reached.
"John [Kubilis] and Local 2243 were willing to be as flexible as they had to be to make this deal work," Caiazza said. "The union contract wasn't an issue."
Kubilis, president of Local 2243, which represents CSC's 1,120 USW members, could not be reached to comment.
Caiazza said the handful of workers still employed at the plant never gave up on the effort to revive the plant. He also credited Judge Bodoh and CSC's secured creditors for extending the company's deadlines several times to allow time to accomplish a sale.
Besides the impact of lost jobs, tax income lost with the closing of CSC will significantly affect parts of Trumbull County.
The county itself, Champion Township, Warren Township, the Champion and LaBrae school districts, the Trumbull Career & amp; Technical Center and the Warren-Trumbull County Public Library all received sizable personal property and real estate tax revenue from the mill before its shutdown.