U.S. metal scrap firm files for bankruptcy due to weak nickel prices, sales
NEW YORK, Sept 25 (Reuters) - Keywell LCC, a Chicago-based metals recycler, has filed for Chapter 11 bankruptcy protection, blaming weak nickel prices and poor stainless steel demand, according to a court filing that outlined plans to sell the company to a larger rival.
In the documents filed on Wednesday, Mark Lozier, president and chief executive officer of the privately held company, said he agreed to sell the firm to Cronimet Holdings Inc, which is part of a German group by the same name.
While Cronimet has agreed to pay an undisclosed sum for the troubled company, Lozier said he will still consider "higher and better" offers from other suitors. Facing financial trouble, the company started looking for an investor in May, he said.
Keywell, which has nine U.S. processing and recycling facilities and a workforce of 119 people, supplies recycled titanium, high-temperature alloys and stainless steel to specialty steel mills and foundries as well as titanium producers in North America.
The metal is made into durable products used in aerospace and tooling.
The move comes against a backdrop of poor market conditions, which have roiled companies across the stainless steel supply chain from nickel producers to stainless steel makers.
Nickel prices, a key ingredient for making stainless steel, had fallen to about $6.25 per lb in July, down 21 percent from the average price last year, Keywell's Lozier said.
Sales had dropped 28 percent to 73,000 tons through the end of August from the same period last year, generating sales of $142 million. The company reported revenue of $330 million from sales of 140,000 tons of metal last year, Lazier said.
In addition to lower nickel prices and weaker-than-expected sales, Keywell blamed its woes on delays by some big stainless steel customers in taking delivery of metal even after it had already been loaded into rail cars.
Founded in 1924 in Detroit, Michigan, by brothers Samuel and Barney Keywell, the company owes about $10 million in loans and $28 million to unsecured trade customers that supply scrap to the firm.
It has more than 1,000 regular scrap suppliers, spanning regional and local recycling yards, industrial plants, governmental agencies and large mills.
Cronimet did not return calls for comment after office hours. An official at Keywell's headquarters in Chicago declined to comment further.
(Reporting by Josephine Mason; Editing by Ken Wills)