Little known U.S. firm takes over Galvex steel

  • 2006-05-10
  • From wire reports
TALLINN - The Galvex group announced on May 5 that a U.S. bankruptcy court had confirmed that Silver Point Capital, an investment firm registered in the United States, had acquired the assets of Galvex, the owner of a steel galvanizing plant in Muuga. Following the court-supervised auction, Silver Point Capital will acquire all the shares of Galvex Holding's subsidiaries 's including Galvex Estonia, Galvex Intertrade and Galvex Trade 's and a substantial part of the other assets of Galvex Holding.

Under the terms of Silver Point's bid, the investment firm will acquire the company in exchange for its secured debt claims against the company. "We are very pleased that Galvex's future ownership has become clear. Silver Point has consistently demonstrated its commitment to protecting and enhancing Galvex's business," said Manfred Buck, acting CEO of Galvex. "Despite the challenges posed by the Chapter 11 proceedings, the positive results of our turnaround plan are already being felt. Quarterly sales volumes have nearly doubled, and the business returned to a positive operating margin in the first quarter of 2006. The senior management team looks forward to working closely with Silver Point to continue the help Galvex grow," Buck said.

Upon completion of the transaction, the bankruptcy protection sought voluntarily by Galvex will be dismissed and all undisputed claims against the company will be paid in the ordinary course of business. Galvex is well positioned to capitalize on the growth in demand for galvanized steel in its key European and CIS markets, the group said in its press release. Silver Point acquired the debt of Galvex after the latter was unable to pay back its loans. In January, Galvex petitioned for Chapter 11 protection, saying the creditor was attempting to control the company's entire assets by forceful means. Galvex's debt to Silver Point amounted to $150 million. The main owner of Galvex was Daniel Bain.

Sources close to Galvex have said it is possible that Silver Point is connected with the Severstal group of Russia, which has shown interest in Galvex. The Russian group allegedly offered $160 million for the company. Silver Point Capital is a company specializing in credit analysis and credit related investment. The online portal Steel Business Briefing reported on May 4 that Severstal was the sole bidder in the auction for Galvex's assets. According to a report published via the portal the following day, Severstal was not the winner of the auction. Galvex's hot-dip galvanizing plant at Muuga just outside Tallinn has an annual output capacity of 500,000 tons.