Liberty Steel has made the winning bid to buy bankrupt Louisiana steelmaker Bayou Steel for $28mn.
Bayou Steel, a merchant bar quality (MBQ) producer, abruptly closed in October. The company operated a 595,000 short ton (st)/yr electric arc furnace (EAF) MBQ mill in LaPlace, Louisiana, that produced steel flats, wide flange beams, channels and angles. The company also operated a 237,000 st/yr rolling mill in Harriman, Tennessee.
A market source said Liberty intends to invest in the Louisiana mill and restart it by 2021. Bayou Steel would bring Liberty to 3mn st/yr of production in the US.
Liberty, which is a part of global group GFG Alliance, has been on a buying spree in the US as the company grows its US footprint to a goal of 5mn st/yr. Liberty bought and restarted an idled wire rod mill in Georgetown, South Carolina, in 2018. In 2019, it acquired wire rod and bar steelmaker Keystone Consolidated in Illinois fro $320mn.
The bid is being challenged by Black Diamond Commercial Finance (BDCF), which made a bid of $33.5mn for Bayou Steel. BDCF is the lead debtor and a subsidiary of Bayou Steel's original owner Black Diamond Capital Management.
"Under controlling precedent, BDCF cannot be compelled to accept less than the full amount of its secured claim," BDCF said in court filings.
By Rye Druzin
