Milwaukee Forge Heading to Auction

March 11, 2010
Two groups in line to bid, others may emerge
Two potential ownership groups are known to be vying to purchase Milwaukee Forge. An auction of the bankrupt-but-still-operating company’s assets will be held on April 28. The court-appointed receiver indicates it has had confidential inquires about the operation from 35 potential bidders. The first group reportedly has agreed to pay $3 million in cash plus a percentage of Milwaukee Forge’s accounts receivable and inventory. Any subsequent offer to purchase will have to raise that bid by at least $150,000. The second potential owner, which has not yet bid, is a group headed by current Milwaukee Forge president and CEO David Mesick and includes other members of the current management team. In February Milwaukee Forge filed a claim for creditor protection under Wisconsin’s Chapter 128 provision. The provision is described as similar to Chapter 11 of the U.S. Bankruptcy Code, though its procedures for transferring company ownership are considered less time-consuming than the federal standard. At the time of the filing it was rumored that a buyer was waiting to bid on the operation, though none was identified. The company’s total liabilities are listed at over $21 million. Its assets are valued at $16.9 million. has a total pension liability of $10.1 million and other retirement benefits reportedly amount to $1.8 million in liabilities. Milwaukee Forge’s assets are valued at $16.9 million. NOG Inc. is the stalking horse bidder. It already owns Millennium Forge Inc., a four-press operation in Louisville, KY, with a sales operation in Milwaukee. NOG also owns two other local manufacturers, Fabricated Metal Products Co. in Cudahy, WI, and Golner Precision Products Co. in Sussex, WI. If its bid is successful at auction, NOG will complete the purchase of Milwaukee Forge and continue operations with the current workforce. Milwaukee Forge president and CEO Dave Mesick heads the second potential ownership group, which includes other current managers, too. This group reportedly has the backing of the two unions representing the plant’s 106 workers, the United Steelworkers of America and the International Association of Machinists and Aerospace Workers. Mesick has indicated his group would honor the workers’ current contracts, negotiated last August. Milwaukee Forge is a 97-year-old company that produces hammer and closed-die forgings and rolled rings in a range of sizes and steel grades. It also performs heat-treating. Its customers are manufacturers of agricultural, construction, mining, and off-highway equipment.