By Paul Ploumis (ScrapMonster Author)
August 31, 2016 04:42:13 AM
SPOKANE (Scrap Monster): Grand Rapids, Minnesota-based Magnetation LLC has announced its plans to shut down its Minnesota and Indiana facilities. The company plans to wind-down operations at its lone iron ore concentrate plant outside Grand Rapids and the pellet plant facility in Reynolds, Indiana. Employees of the facilities have been notified of a potential shutdown by September 30th. The Minnesota facility employs nearly 180 workers, whereas nearly 165 people are employed at the Reynolds facility.
In a notice to the state authorities, Magnetation LLC warned that the Reynolds pellet plant facility would close its doors by end-September unless it is successful in coming to an agreement with an investor which would allow the company to emerge from bankruptcy. The affected employees are likely to be laid off around October 25.
The Reynolds pellet plant is the only Magnetation facility in Indiana. The plant, with annual capacity of 3 million tonne, had been the largest provider of feedstock for AK steel’s Middletown, Ohio, and Ashland, Kentucky, steelmaking operations. Also, Grand Rapids facility used to recover high-quality iron ore concentrate from abandoned iron ore waste.
Magnetation CEO Larry Lehtinen stated that the company has informed the employees to prepare themselves for a safe and orderly wind-down, in the best interests of employees, creditors and other stakeholders. However, the company will continue to seek alternative to a permanent shutdown by entering into negotiations with potential buyers. He further assured that Magnetation will work closely with government agencies to provide necessary assistance to affected employees in the event of a shutdown.
In a news release, Lehtinen stated that the company’s sole focus is to continue to safely produce and ship high quality pellets until the operations potentially shut down. At the same time, it will work closely with several interested parties in order to avoid shutdown of its plants. However, Lehtinen declined to reveal the names of those potential investors who are currently evaluating an investment into the company. The motion filed by Judge William Fisher Saturday also stated that several companies have shown interest in Magnetation's assets but that none had yet come forward.
Earlier in May 2015, the company had filed for Chapter 11 bankruptcy, unable to pay its bills. In its filing, the company had listed assets of around $100 million to $500 million and liabilities of between $500 million and $1 billion. However, Magnetation LLC had stated that it has already entered into a restructuring agreement with majority of creditors.
Meantime, AK Steel Holding Corp., which holds 49.9% stake in Magnetation, had entered into a settlement, by which it had agreed to pay $37.5 million to end an iron-ore pellet agreement with Magnetation LLC. The agreement makes AK Steel eligible to bid on Magnetation assets once the bankruptcy is final. As per terms, Magnetation is entitled to terminate the settlement agreement with AK Steel if it receives an alternative offer that would avoid a shutdown. The settlement is subject to approval by bankruptcy court, whose next hearing is set for September 27.