Magnetation to sell remaining assets, secures $22.5 million credit bid

By Caroline Salls

Pittsburgh, Dec. 7 – Magnetation LLC requested court approval to enter into an asset purchase agreement for the sale and transfer of substantially all of its remaining assets and some liabilities to ERP Iron Ore, LLC through a credit bid submitted by the company’s post-bankruptcy lenders, according to a news release.

According to the sale motion, the company’s debtor-in-possession financing agent will credit bid $22.5 million of its allowed claims.

The initial buyer will then transfer its rights and obligations under the purchase agreement to ERP in exchange for $22.5 million of notes issued by ERP.

Magnetation said this motion to sell its remaining assets follows entry into a global settlement agreement, which was approved by the court on Oct. 6 and provides for the wind down of operations, the sale of inventory and accounts receivables, the termination of the company’s pellet purchase agreement and the sale of the remaining assets.

The asset purchase agreement also calls for the assumption and assignment of specified executory contracts and leases.

“After nineteen months under bankruptcy protection, we are pleased to have reached this important milestone supported by a wide coalition of the stakeholders in this case,” Magnetation chief executive officer Larry Lehtinen said in the release.

“This outcome provides the potential for a restart at some point in the future of the state of the art Magnetation assets as a going concern, which has been our goal and would provide the best possible value to the estate and its stakeholders.

“We are especially pleased to be acquired by ERP Iron Ore, LLC, an affiliate of ERP Compliant Fuels, LLC, an innovative company founded and led by Tom Clarke with whom we share a vision for advancing our unique and environmentally responsible technology, that turns abandoned iron resources into valuable, high quality iron ore pellets to serve steel-makers on a global scale.”

A hearing is scheduled for Dec. 15.

Magnetation, a joint venture between Magnetation, Inc. and AK Steel Corp., 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 in the U.S. Bankruptcy Court for the District of Minnesota under Chapter 11 case number 15-50307.

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