The Change Mariner

The Russians Are Coming to Take Over Rouge Steel

New York Times:

Rouge Steel, whose sprawling works became a symbol of raw 20th-century capitalism, may soon rest in the hands of even rawer owners: Russian investors. Rouge, the nation's fifth-largest steel producer, said late Thursday that it had filed for Chapter 11 bankruptcy protection, and had agreed to be acquired by OAO Severstal, Russia's second-largest steel producer.

Financial terms were not disclosed and no timetable was set for Rouge's emergence from bankruptcy. But according to documents filed with the United States Bankruptcy Court in Wilmington, Del., Rouge, whose customers include the Detroit auto companies, has arranged for $120 million in debtor-in-possession financing.

It also obtained $30 million in bridge financing from Severstal, at 15 percent interest, which finance experts deemed an unusually high lending rate, even for a bankrupt company.

A spokesman for Rouge Steel, William E. Hornberger, pointed out, however, that Rouge Steel's plight was well known. The company, founded here in 1923 as an arm of the Ford Motor Company, has not made money since 1999, and had been seeking a buyer for the last year. "Send us those banks that would give us 7.5 percent money," Mr. Hornberger said.