Midwestern firm to buy Evraz Claymont Steel, clean it up and redevelop the site
Nov. 11, 2014 JEFF MONTGOMERY
THE NEWS JOURNAL
A national company plans to buy, raze, clean up then redevelop the shuttered Evraz Claymont Steel site in a deal initially worth “tens of millions” of dollars, officials involved said Monday.
The project will be led by St. Louis, Missouri based Commercial Development Company, Inc., working with three other companies on a voluntary cleanup plan that will be proposed shortly to the Department of Natural Resources and Environmental Control for approval.
Randall Jostes, Commercial Development’s CEO, said the company hopes to settle on the 425-acre property by the end of the year, with a potential 2 1⁄2-year series of projects following to remove contamination and plant buildings, and remedy any soil and groundwater contamination.
“The Evraz site in Claymont is a spectacular site. We were attracted to the heavy infrastructure that exists, the utilities and the interstate, rail and water access,” Jostes said. “And we’re attracted to the educated workforce that’s in that market. All those combined to make that a tremendous site for new development.” Delaware Economic Development Office Director Alan Levin said state officials are “very encouraged” by the news and by the company’s extended plan. Environmental Liability Transfer Inc., an affiliate of Commercial Development that was formed to assume environmental liabilities, will oversee the cleanup, which will be directed by another affiliate, EnviroAnalytics Group.
“They’ve given us their assurance,” Levin said. “Obviously, they bought it as an investment. They’re not going to flip it quickly. They’re in it for the long haul.”
At a news conference at the Crowne Plaza Hotel on Naamans Road, Jostes said Monday that Evraz and CDC will jointly finance a remedial trust fund to finance the cleanup, with a goal of creating “pad-ready” parcels. A nationwide, “if not worldwide,” marketing strategy would follow.
“We are not asking for any state funds; we’re not asking for brownfield tax credits,” Jostes said. “We simply believe in the site, in the infrastructure and the community.” New Castle County Councilman John Cartier and Sen. Harris B. Mc-Dowell III, D-Wilmington North, both encouraged Jostes to factor plans for relocation of the Claymont commuter rail station into redevelopment plans. Community members and leaders also urged the company to keep residents informed both about plans and about findings from environmental investigations.
Evraz, part of an international group led by Russian investors, announced an indefinite closing of the Claymont plant in December. In June, it made the closing final and announced a search for buyers. Talks with Commercial Development have been going on for some time, officials said.
Commercial Development formed in 1990 to acquire large, shuttered heavy manufacturing sites for conversion for lighter distribution and industry complexes. Since its founding, it has acquired 54 million square feet of industrial building space around the country, and about $1 billion of cleanup liabilities.
Recent ventures include the ongoing redevelopment of the 3,100acre Sparrows Point steel site in Baltimore.
New Castle County Executive Tom Gordon said he received a briefing on the plan Monday morning and said it has “great potential.”
“It’s going to take a while,” Gordon said. “We’re committed to a renaissance up in Claymont. It might take a couple years. They have a lot of environmental cleanup work to do. It’s going to provide us with a great opportunity to maybe create livable wage jobs in Claymont.”
“We have not passed judgment on what the new development will be,” Jostes said. “We have 2 1 ⁄ 2 years to get it ready. During that period, we’ll be doing land planning, land studies, meeting with stakeholders in the community, informing all the stakeholders and basically making a collective decision about what is the best use going forward.”
Although few specifics on possible uses were discussed by Commercial Development, the Claymont Renaissance Development Corp. on Monday afternoon pointed to light manufacturing, bulk transfer or office park possibilities and noted that the steel plant property offers “a berth for potential Delaware River shipping needs.”
“This, along with the growth of Sunoco Logistics’ Marcus Hook/Claymont facility directly to the north, has the potential to bring much-needed jobs to the area and contribute to the revitalization of the Claymont community,” Brett Saddler, Claymont Renaissance executive director, said in a written statement.
The announcement marks the final chapter of what had been a nearly century-long run of bar, tube and plate-making steel operations at the property straddling Philadelphia Pike near the Pennsylvania line.
Hundreds of workers – sometimes as many as 2,000 – kept its presses and melt shop working through all or parts of two world wars and a string of booms and busts in the steel industry.
Evraz bought the plant for $564 million in 2007 from a group controlled by a Florida-based investment company that itself bought the plant for $74 million just two years earlier and quickly extracted $239 million in dividends and net equity proceeds, largely paid for through borrowing.
The final purchase came near the top of the last run-up of the national and global economy and put into Evraz’s hands an operation hugely saddled with debt just as the economic bubble burst. A 2007 Moody’s Investors Services ratings statement said that the debt was “high for a small, relatively high-cost niche producer of custom discrete plate operating out of one plant.”
“As a ratio of steel shipments, debt is around $400 per ton, which is much higher than for any other steel company” rated, Moody’s said.
Contact Jeff Montgomery at (302) 463-3344 or firstname.lastname@example.org.
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