The Sparrows Point steel mill is getting a new owner and possibly a new lease on life under a deal announced Wednesday.
The Baltimore County plant, which has been largely idle since the summer, and two other properties owned by OAO Severstal were acquired by the Renco Group Inc. for $1.2 billion.
The Russian steel giant had paid $2.2 billion for the plants, including Severstal Warren in Ohio and Severstal Wheeling in West Virginia, in 2008. Of the total amount, Severstal paid $810 million for Sparrows Point.
Severstal will receive $125 million in cash, a $100 million secured note and $317 million payment toward debt. Renco, a private investment firm, will also assume $650 million of Severstal’s financial liabilities including employee-related and environmental liabilities.
RG Steel LLC, a newly formed subsidiary, will take over the mills. In announcing the deal, RG Steel, which will be headquartered at Sparrows Point, said it had reached a new collective bargaining deal with the United Steelworkers union. The deal needs to be ratified by its members.
“Our members have withstood two years of uncertainty brought about by circumstances beyond their control,” United Steelworkers International President Leo W. Gerard said in a statement. “Finally, their patience and solidarity have been rewarded, and the ownership issues have finally been resolved.”
John Cirri, president of United Steel Workers Local 9477, which represents workers at Sparrows Point, did not return a call seeking comment on the deal.
Rep. C.A. Dutch Ruppersberger, D-Md., said talks had been underway the past year to find not just a buyer, but one that would open the plant back up to full capacity.
“For more than a century, the plant has produced steel that has literally built our country,” said Ruppersberger, who represents the district in which the mill sits. “Sparrows Point has a rich, proud tradition that can now continue.”
News of the deal was embraced Wednesday by other lawmakers, who said hopes were high the plant, once one of the most productive in the country, would see production ramp back up. Nearly 1,200 workers have been laid off from Sparrows Point, which has been operating in a limited capacity since July 25.
“For generations, Sparrows Point has been a major employer and a significant economic asset for the State,” Gov. Martin O’Malley said in a statement. “We welcome RG Steel and its headquarters to Maryland and stand ready to help the company and the United Steelworkers return, re-train and retain nearly 2,000 steelworkers in Sparrows Point.”
Baltimore County Executive Kevin Kamenetz said the news was even more welcome considering the concern Severstal would just shutter the facility instead of finding a buyer.
“Fortunately, the industry has another day,” he said.
Del. John A. Olszewski Jr., D-Baltimore County, whose district includes Sparrows Point, said the news that RG Steel planned to put its headquarters at Sparrows Point could lead to even more jobs.
“You’re talking about potentially 2,000 people who have been laid off who are going back to work,” he said. “I don’t know how many people will be associated with the headquarters, but you could be looking at job growth as a result of the transaction.”
Privately held Renco was founded in 1975 by Ira L. Rennert. Renco’s companies have $5 billion in revenue and 15,000 employees. One of Renco’s subsidiaries is AM General — a former subsidiary of American Motors that created the Humvee military vehicle.
The deal is expected to close this month, pending regulatory approval.
Daily Record Business Writer Nicholas Sohr contributed to this article.