Judge OKs Reorganization For Sharon Steel
FARRELL, Pa. (AP) _ A federal judge on Wednesday confirmed a plan to spin off financially ailing Sharon Steel Corp.’s steel division to a New York merchant bank and sell brass, railroad and mining interests to unsecured creditors.
The reorganization plan brings the nation’s 18th largest steelmaker out of Chapter 11 proceedings in U.S. Bankruptcy Court, said merchant banker Castle Harlan Inc. and Quantum Overseas N.V., the company’s largest unsecured creditor.
U.S. District Judge Warren Bentz approved the plan the day after confirmation hearings in his Erie courtroom.
Castle Harlan will pay $300 million to acquire Sharon Steel’s Mercer County steel mill, which employs 2,500 people, and assume some of the company’s steel debt, according to Castle Harlan and Quantum Overseas.
They said Quantum Overseas would pay $50 million for a 30 percent share of a company formed from Sharon Steel-owned Mueller Brass Co. and Arava Natural Resource Co., with the rest of the new company going to other unsecured creditors.
The brass, railroad and mining divisions, to be renamed Mueller Industries Inc., employs 2,500 and posted income of more than $500 million in 1989, Castle Harlan and Quantum Overseas said.
The firms said outstanding shares of Sharon Steel stock would be canceled, with holders of those shares receiving no compensation for their holdings.
Fifty-eight percent of United Steelworkers union members at Sharon Steel approved a new contract for the steel spinoff, said Castle Harlan and Quantum Overseas.