At an asset auction completed last Friday, Republic Engineered Product chose the "stalking horse" bid from PAV Republic over a number of rival bids.
The choice must still be approved by the federal bankruptcy court overseeing Republic's Chapter 11 reorganization. Among those expected to object are the holders of $80 million worth of notes, among whom are rivals to the PAV Republic bid. The PAV bid would compensate the noteholders at less than 100% of their listed value with a new issuance of common stock.
PAV Republic Inc. is a company formed by investment group Perry Strategic Capital to bid for the Republic's assets. Perry is a private equity investor group.
The PAV bid calls for continued operation of all the Republic operations and maintenance of the existing labor agreement.
"We are optimistic that we will be able to move forward, assure a continued source of supply for our customers and provide job security for our employees," said Joseph F. Lapinsky, president and chief executive officer of Republic.
PAV Republic's offer is worth at least $245 million, according to reports. Republic filed for Chapter 11 bankruptcy in September after a series of setbacks to its business following the August 14 blackout in the Northeast and Midwest. It continues to operate.
This has been the second turn in bankruptcy for the organization. It filed for creditor protection in 2001 and emerged in 2002.