Havens to Lease, Then Sell, a Plant
Jul. 2–Beleaguered Havens Steel Co. received bankruptcy court approval Friday to lease its Ottawa, Kan., plant to Schuff Steel Co.
It is also proceeding with plans to sell the facility to Schuff or another bidder.
U.S. Bankruptcy Judge Jerry Venters approved Havens Steel’s motion to lease its Ottawa operation to Schuff, allowing the plant to continue working on a project in Phoenix and to maintain the existing work force there. Schuff, based in Phoenix, also has agreed to buy the Ottawa plant for $4.5 million.
But Venters also approved a process to allow competitors to bid on the Ottawa plant through July 11. Any new bids would have to exceed Schuff’s offer by at least $500,000.
Havens Steel marketed the Ottawa facility before agreeing to sell it to Schuff, said Jonathan Margolies, the company’s bankruptcy attorney.
“The Schuff offer, by seven figures, was better than others we received on the property,” Margolies told Venters Friday.
However, one lawyer at the hearing representing an unidentified group of potential investors said the lease agreement with Schuff would have a “chilling effect” on the bidding process.
Cynthia Parres, an attorney with Bryan Cave, declined to identify the potential bidder but argued that Schuff’s lease gave it an unfair advantage in purchasing the Ottawa plant.
Margolies disagreed, saying the lease and auction process is supported by St. Paul Fire and Marine Insurance Co., which holds the lien on the Ottawa facility.
“All the proceeds of this sale goes to St. Paul,” said Margolies of McDowell, Rice, Smith & Buchanan. “St. Paul is expressing no concerns that this will have a chilling effect on the bidding. They should be screaming the loudest if the lease was having a chilling effect in realizing the maximum value of this property.”
Venters said Havens’ financial condition warranted approving Friday’s motion.
“It’s been obvious over the last few months that this company is running on fumes, basically,” he said. “I think we must do what we can to preserve what value is left in the company.”
Margolies said earlier this week that Havens Steel most likely would be liquidated after selling its Ottawa plant, which has about 120 employees.
Officials of Schuff Steel were pleased with the bankruptcy court’s approval Friday.
Schuff will begin fabrication work on the Phoenix Convention Center next week, the project that the Ottawa plant has been working on, said Scott Sherman, the company’s vice president and general counsel.
“I think the employees in Ottawa were happy to learn (Thursday) that a company like Schuff is coming in to run the plant,” he said.
Sherman declined to comment on whether Schuff would put in another bid for the plant if a competitor surfaces with a bigger offer by July 11.
“We’ll just have to wait and see,” he said. “We think we’ve offered a fair price.”
Havens Steel was formed in 1919. In recent years, the Kansas City company had about 700 employees and worked on big commercial projects around the country.
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