Bids for some or all of bankrupt US zinc recycler Horsehead Holding Corp will be accepted by August 26, ostensibly providing the first official public indication of how the market values the Pittsburgh-based company and its idled $550 million zinc plant in Mooresboro, North Carolina.
Until now, there has been considerable disagreement in how key groups value the company, which filed for Chapter 11 bankruptcy reorganization February 2 in the US Bankruptcy Court for the District of Delaware.
Horsehead's credit group values it at about $280 million, far less than the company equity committee estimate of $770 million-$850 million.
According to a court filing last week, bids will be accepted until noon local time August 26, with a confirmation hearing set August 30 in the Texas courtroom to approve the company's reorganization plan.
Much of the dispute about the company's value centers around Mooresboro, which endured operational difficulties before it was shut in late January, just ahead of Horsehead's bankruptcy filing.
Horsehead has described the plant as virtually worthless in previous court filings, estimated it would cost at least another $117 million to get the plant up and running at its nameplate capacity of 155,000 mt/year.
In the bid notice from Lazard, Horsehead's investment banker, bidders are advised to clearly identify whether they intend to acquire Mooresboro "and all related costs and liabilities through its proposed transaction."
Besides saying whether they want to buy Mooresboro, bidders are further urged to clearly identify which liabilities, if any, they are willing to assume and which will be excluded.
On July 8, 2014, Horsehead said that Mooresboro, built several years ago, would undergo a temporary outage to repair, upgrade and replace some of the mixing compounds in a series of tanks. Operations resumed in August 2014, but two months later, the company reported that while numerous improvements were made to several unit operations at the plant during second-quarter 2014, production during the quarter was impeded by operational issues associated with controlling the removal of solids in the clarifier unit downstream of the leaching process.
In March 2015, Horsehead said it experienced "intermittent equipment reliability issues, particularly with some key pumps, which were further exacerbated by extreme cold weather conditions at the end of year 2014 and beginning of 2015."
Horsehead then reported May 8, 2015, that recent output at Mooresboro was lower than expected primarily because of an extended period of exceptionally heavy rains, which filled the plant's containments and holding ponds, requiring the company to process excess water rather than produce zinc.
Horsehead said Mooresboro produced only 4,100 mt of zinc in the Q2 2015, with output edging up to 9,700 mt in Q3 2015.
The company has said that, with certain modifications, Mooresboro conceivably could produce up to 170,000 mt/year, but that would require the infusion of many more millions of dollars, according to the company.
