CLEVELAND Bankruptcy auction fails to revive CSC

A spokeswoman for the Ellwood City company that bid on a part of the mill in July wouldn't say whether it would try again today.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
CLEVELAND --
Hope for an intact sale of the idled CSC Ltd. steel mill were dashed when noone
CSC revive CSC Ltd. as an operating steel mill met with failure when no one bid on the idle mill in a bankruptcy auction this morning.
However, there's still a chance that one of the buyers bidding on major equipment at CSC might try to operate a part of the mill, said Lou Goldberg, a spokesman for auctioneer Michael Fox International.
He said the melt shop and continuous caster, two of the largest and newest features of the mill, were sold before the auction began.
Goldberg would not reveal the name or names of the buyers of these pieces, nor how much they paid, but he said the buyers were from outside the United States.
Rules of sale set by Judge William Bodoh of U.S. Bankruptcy Court in Youngstown required that any bidder buying major equipment before the auction had to offer at least 70 percent of the appraised price.
About 70 people attended the opening of a two-day auction at a Cleveland hotel. About 120 bidders were registered, and 40 additional bidders were registered for online bidding.
What was tried: At the start of the auction, the mill was offered in its entirety, but no one bid. Next, all of the machinery and equipment were offered as a group, and there were no bidders. Then the real estate was put up for bid, and no one bid.
At that point, auctioneer David Fox explained that mill operations in which several large pieces of equipment operate together will be offered as a package. That auction was continuing this morning.
Once the fourth-largest employer in Trumbull County with a $4 million monthly payroll, CSC filed for Chapter 11 bankruptcy protection in January and halted steelmaking operations in April. The move left 1,375 hourly and salaried workers jobless.
Company officials wanted to sell the facility to save jobs and hired the Cleveland office of McDonald Investments to start looking for a buyer even before the Chapter 11 filing.
Local 2243 of United Steelworkers of America, which represented about 1,120 CSC hourly workers, successfully lobbied federal, state and local government representatives to come up with a package of government loans, grants and tax breaks to attract a new owner.
What happened: Several prospective buyers toured the plant, but the first court-ordered auction in July was canceled because of a lack of interest. No bidder made the commitment deposit required under the auction rules.
One bidder emerged soon after the canceled auction. Ellwood Group Inc., a privately held family-owned metal fabricating business based in Ellwood City, Pa., offered $2.4 million for CSC's thermal treatment and finishing operations.
Ellwood's offer was not accepted at the time because CSC wanted to find one buyer to operate the whole plant, but company and union leaders alike were hoping the Pennsylvania company would try again today.
Hopes for an in-place sale were revived in August when Renaissance Partners, a regional management buyout firm, said it had an investor with ready cash who might be interested in reopening the facility.
Two months later, those hopes were dashed when Renaissance announced it would not longer pursue buying CSC, citing market changes since the Sept. 11 terrorist attacks.
Renaissance said the troubled economy brought a flood of troubled companies in need of the buyout firm's assistance, many of which would involve less risk than buying a struggling steel mill.
Judge William Bodoh of U.S. Bankruptcy Court in Youngstown, who frequently voiced concern about the importance of reopening the mill, said he scheduled this week's two-day auction as a last resort.
Background: Lenders, who have said they expect to lose most of more than $100 million the steelmaker still owes, had been pressing for the auction for months. CSC officials also pushed for an October auction date, once the Renaissance deal fell through, arguing that cold weather would hamper the results if the sale were held any later.
CSC started out as Copperweld Steel in 1939, producing iron at the Mahoning Avenue N.W. plant for the U.S. military.
Copperweld had been losing money for years when it filed for Chapter 11 bankruptcy protection in 1993. Two years later, the mill emerged with a new name, CSC Ltd., and a new owner, The Reserve Group of Akron.
Business went well for the new company at first, and managers boasted of 13 consecutive profitable quarters. Sales were averaging $200 million a year, and the company held 10 percent of the market in its product category.
In 1996 the investor owners announced plans for an ambitious, $100 million modernization project designed to improve the yield and efficiency of the aging mill.
The project timing coincided, unfortunately, with a damaging increase in cheap foreign steel that forced domestic steel prices to plummet, along with product demand.
The steel dumping hurt CSC less than some other suppliers, but that damage was compounded by slow start-ups of its new equipment and a resulting decline in production.
Problems: By the end of 2000, just as banks were losing interest in lending to the foundering steel industry, CSC faced a $100 million capital improvement debt plus a need for cash to operate.
The company tried to use cash collateral to continue operating after the Chapter 11 filing, but by April 13, the cash-strapped company was forced to mothball the plant equipment and close down operations.
The Baltimore firm of Michael Fox International conducted the auction today.