Renco Group Will Submit Bid to MagCorp Trustee
Statement from Renco
Today The Renco Group, Inc. notified the Chapter 7 Trustee of the estates of Magnesium Corporation of America and Renco Metals, Inc. (the "Trustee") that Renco intends to submit a timely bid in connection with a Chapter 7 sale process being run by the Trustee. The Trustee commenced the sale process by reaching an agreement to sell an interest in a litigation judgment against Renco (that is currently on appeal) in favor of the estates (the "Judgment") to a litigation funding hedge fund (the "Fund") and then seeking and obtaining stalking horse status for the Fund. The deal reached by the Trustee provides that the Fund will pay the estates $25 million and, if the estate collects on the Judgment, the estates will pay the Fund approximately $53 million, more than a 200% annualized return to the Fund. If the Judgment is not collected the estates keep the $25 million.
Renco's letter to the Trustee, as well as the term sheet attached to the letter which describes Renco's bid, is attached to this release. Renco believes that its bid provides greater, faster and more certain value to creditors of the estates. Renco's bid will provide a minimum recovery to the estates of $45 million – approximately $20 million more than the trustee's deal with the fund – will provide the estates with an upside potential of a total of $100 million, will assume certain potential environmental and pension liabilities and will cause the release of Renco's pending litigation that seeks to disallow recovery to holders of Renco Metals' 1996 11.5% Senior Notes.
Renco has issued this release so that all bondholders and other parties in interest receive notice of Renco's bid. Renco reserves the right to modify its bid in any manner and in its sole discretion.
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Contact: Jim McCarthy