Magnetation secures court approval of global settlement, wind down

By Caroline Salls

Pittsburgh, Oct. 6 – Magnetation LLC received court approval of a global settlement under which the iron ore pellet offtake agreement between Magnetation and AK Steel Corp. will be terminated and Magnetation’s business will be wound down, according to an order filed Thursday with the U.S. Bankruptcy Court for the District of Minnesota.

As previously reported, Magnetation revolving credit facility lenders JPMorgan Chase Bank, NA, Associated Bank, NA and BMO Harris Bank NA are also parties to the settlement.

Following bankruptcy court approval of the transaction, AK Steel will make a cash contribution of $37.5 million to Magnetation’s Chapter 11 estate, and AK Steel will cease purchasing iron ore pellets from Magnetation.

Also under the settlement, AK Steel’s net payment may be partially offset based on the amount of proceeds generated from the eventual sale and/or liquidation of Magnetation’s plant, property and equipment and other assets.

AK Steel said it expects to be able to purchase replacement iron ore pellets from third-party producers and expects to benefit from enhanced flexibility regarding iron ore pellets as a result of terminating its offtake agreement with Magnetation.

Magnetation, a joint venture between Magnetation, Inc. and AK Steel., recovers high-quality iron ore concentrate from previously abandoned iron ore waste stockpiles and tailings basins. The Grand Rapids, Minn.-based company filed for bankruptcy on May 5, 2015 under Chapter 11 case number 15-50307.

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