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Jobs - Closed EVTAC Will Soon Reopen As United Taconite; ... 400 Jobs Regained

By Charles Ramsay




November 26, 2003

ST. PAUL — A new era in mining on the Iron Range was launched Tuesday.

A new company, United Taconite, received permission to begin operations with the purchase of the assets of Eveleth Mines LLC, or EVTAC, in Eveleth and Forbes for $3 million in cash and pledges of equity of $10 million in capital, as well as investments in fixing up the plant and assumption of up to $40 million in liabilities. The company is the joint venture of Cleveland-Cliffs Inc. and Laiwu Steel Group of China.

The deal will be finalized next week.

The resulting salvaging of a Range taconite plant from bankruptcy, with more than 400 miners returning to work by mid-December, was due to the unique partnership investing in the 38-year-old plant, and a complex three-nation arrangement that expands the Minnesota taconite industry’s involvement with Canadian and Chinese steel markets.

U.S. Bankruptcy Judge Gregory Kishel, originally from Virginia, Tuesday afternoon approved a request by EVTAC to accept a cash offer from Cliffs and Laiwu.

“The market spoke here,’’ Kishel noted, of the nine-hour marathon bidding Monday for the assets between Cliff-Laiwu and Gerald Metals, which made a last-minute bid last week for EVTAC assets. Kishel added that the bidding “seems to have been a very lively process.’’

Cliffs Vice Chairman David H. Gunning, present for the court hearing, observed later that “the first pellets should be shipped Christmas week.’’

EVTAC attorney Michael Meyer opened the court hearing with a description of the asset bidding Monday between Cliffs-Laiwu and Gerald Metals, based in Stamford, Conn.

“After a few grueling days we have arrived at a winning bid, so to speak, from United Taconite,’’ Meyer told Kishel.

Bidding between Cliffs-Laiwu and Gerald Metals proceeded through several rounds, Meyer recounted, but “the highest and best offer was that of United Taconite” (Cliffs-Laiwu) of $3 million cash, and Gerald Metals’ best offer was about $1.5 million below that, Meyer related to the court.

The creditor committee accepted the Cliffs-Laiwu offer, with the condition of a side case in a Delaware court involving Rouge Steel, which has been a part-owner of EVTAC. Cliffs-Laiwu has secured a labor agreement with United Steelworkers, has a pellet contract through 2012 and has energy and transportation agreements.

Iron Range Resources and Rehabilitation Board Deputy Commissioner Brian Hiti said outside court that the state is not giving up on about $8.5 million in taconite production taxes owed the IRRRB, and will seek to collect something on it. He explained that the state had agreed to reduce the priority of its taconite tax claims from the highest level, administrative costs, to a slightly lower level to allow the deal to go through.

IRRRB Commissioner Sandy Layman told the Associated Press Tuesday that much of the $3 million from Cliffs-Laiwu would go to pay back taxes owed by EVTAC to the state.

Kishel waded through a number of points raised by the platoons of dark-suited lawyers for numerous clients involved in the complex case during the hearing, including several items filed by lawyers for Minnesota Power, Banc One Leasing, Wells Fargo Business Credit, the DM & IR Railroad and various Eveleth area fee-holders. A chambers conference with feeholders and other officials forced a 40-minute break at one point.

Meyer called EVTAC President Howard Hilshorst to the stand, for testimony on how the taconite plant filed for bankruptcy May 1, and searched for pellet contracts or buyers until Laiwu contacted them about buying the plant in the summer. Negotiations with Cliffs resulted in the joint offer.

Hilshorst described phone calls or talks with various companies, but only Gerald Metals and Cliffs-Laiwu brought forth fuller offers.

Meyer asked if he had let the industry and area know about the EVTAC assets sale sufficiently. Hilshorst replied, “We took out ads in the Mesabi Daily News, Duluth News Tribune and the Wall Street Journal.’’

Kishel also granted relief from debts to the EVTAC corporation as part of the bankruptcy proceeding. Meyer told the judge there was about $2.5 million left for unsecured creditors and priority creditors to divide up, which would be addressed in coming days.

Pellets from United Taconite will go to North American markets, while Stelco and other Canadian firms will be selling pellets to China, through Cliffs connections and relationships. Cliffs is a familiar player on the Iron Range, owning the Northshore Mining plant in Babbitt and Silver Bay and is a part-owner and manager of Hibbing Taconite. Laiwu Steel is looking to acquire more steel, as China is ramping up its capacity to 230 million tons annually.ST. PAUL — A new era in mining on the Iron Range was launched Tuesday.

A new company, United Taconite, received permission to begin operations with the purchase of the assets of Eveleth Mines LLC, or EVTAC, in Eveleth and Forbes for $3 million in cash and pledges of equity of $10 million in capital, as well as investments in fixing up the plant and assumption of up to $40 million in liabilities. The company is the joint venture of Cleveland-Cliffs Inc. and Laiwu Steel Group of China.

The deal will be finalized next week.

The resulting salvaging of a Range taconite plant from bankruptcy, with more than 400 miners returning to work by mid-December, was due to the unique partnership investing in the 38-year-old plant, and a complex three-nation arrangement that expands the Minnesota taconite industry’s involvement with Canadian and Chinese steel markets.

U.S. Bankruptcy Judge Gregory Kishel, originally from Virginia, Tuesday afternoon approved a request by EVTAC to accept a cash offer from Cliffs and Laiwu.

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