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Officials study options to achieve RG Steel restart
By Ed Runyan
WARREN
Government might have to secure $50 million in grants and loans to help investors bring the former RG Steel Warren mill back to life.
But before officials can become too focused on that, two other things need to happen, a Trumbull County economic development official says.
“An entity needs to be in place before you can apply for grants or loans for them,” said Mark Zigmont, economic development coordinator for the Trumbull County Planning Commission.
The “entity” Zigmont refers to is the management group or buyer that needs to surface to take over the mill from C.J. Betters Enterprises, the Monaca, Pa., company that bought the mill out of bankruptcy for $17 million.
“The primary focus is we have to get a buyer,” Zigmont said. The planning commission works under the direction of the Trumbull County commissioners.
Charles Betters, owner of the company, came to Warren last week to talk to local officials and some of the mill’s 1,200 former employees about his desire to sell all or part of the mill to a team that would restart it.
Betters said he and two business partners could triple their $17 million investment by scrapping the mill but said they would rather see the mill reopen.
Secondly, Betters needs to be successful in winterizing the plant in the next few months so it could still produce steel come spring.
Betters told steel workers last week he is serious about doing that, and he tried to demonstrate his concern for their plight by meeting with them for half an hour in the hot sun outside the plant’s administrative offices.
Zigmont said the entity that would take over the mill could take several forms. One could be for an employee stock ownership plan (ESOP) to purchase an interest in the plant, perhaps with Betters retaining a minority interest and another investment group getting involved.
He’s talked with the Steelworkers union about the ESOP idea, Zigmont said.
“The primary focus is we have to get a buyer. Whether we get an ESOP or some other way, we have to get a buyer, an operator,” Zigmont said.
Zigmont said roughly $34 million would be needed to buy the mill from Betters and an additional $15 million for start-up costs.
“Probably $50 million,” Zigmont said of the grants, loans and loan guarantees needed.
Among the departments in the federal government that could help raise the money are the U.S. Economic Development Administration and U.S. Department of Agriculture, Zigmont said.
U.S. Rep. Tim Ryan of Niles, D-17th, said his staff is “researching that right now, looking at every possible option and program that could make this happen” and checking with the county, city and state to research what the options are.
“We’re completely engaged on this thing,” Ryan said. “We want every loan guarantee or program to be explored.”
A loan guarantee generally provides government backing for loans made by a private financial institution.
Ryan said it’s important to keep in mind that RG Steel employed more than 1,000 people, which means an additional 5,000 to 7,000 jobs in the mill’s supply chain are being negatively affected by the closing.
As for the government investing millions to try to keep the plant open, Ryan said it’s “certainly responsible to do that,” just as it was responsible to help General Motors stay in business, and it’s proper to help companies stay competitive by offering incentives to help them expand and grow.
Rose Ann DeLeon, the Youngstown-based economic development leader of the Western Reserve Port Authority, said her office has the ability to assist with the acquisition of capital that would be needed to buy the mill.
First, the purchase by C.J. Betters would need to be finalized in U.S. Bankruptcy Court, and then an operator for the mill would need to be identified, she said.
“Then we would come in and discuss capital needs,” she said.
“If they identify improvements, we could issue bonds to help with financing of that work with the state to put a package together,” she said.
Though new owners would perhaps like to acquire working capital — money to build or run its business — government generally doesn’t provide that, DeLeon said.
“That is usually up to the owners,” DeLeon said.
But the money that investors might need to acquire the mill or become part-owners could come from a bond sale, DeLeon said.