Shamrock made bid as part of stalking horse bidder agreement
A buyer has made a bid to purchase Mid America Brick in Mexico, and a Clayton-based investment banking firm hired by MAB to market the business for sale told The Mexico Ledger Friday that other companies nationwide are voicing interest in the debt-stricken, 1-million-square-foot facility.
According to R.L. Hulett & Co. executives, Shamrock Proppants LLC of Kirkwood has been selected as the "stalking horse bidder" and has made a bid for the assets of Mid America Brick – which filed for bankruptcy in February and halted production earlier this month.
According to court documents, Shamrock's CEO Frank O'Brien intends to make ceramic proppants, used in oil and natural gas drilling, at the facility. The company may also resume brick production, O'Brien said.
According to a St. Louis Post-Dispatch today, O'Brien made a bid just under $2 million to buy the plant.
Hulett officials said while a bid has been made, MAB is still in bankruptcy, and that the bidding action is just part of the bankruptcy process.
"This is only the beginning of the process. This doesn't mean they (Shamrock) own anything yet. The stalking horse is always early in the process. There will be other people and more activity after this news comes out," said R.L. Hulett Director Jason Rauschelbach. He also noted "many people are interested in the company, but didn't want to be the stalking horse."
Shamrock made the bid as part of a stalking horse bidder agreement. The stalking horse bid sets the minimum price but higher offers can still be made, and the bankruptcy judge must approve the sale.
A stalking horse bidder, Rauschelbach explained, is used to set a base price for an auction. Once the bid is made, other potential buyers can then submit their competing bids. "Basically the stalking horse sets the bar so others don't lowball the process."
Rauschelbach said a procedure hearing is scheduled June 20 in St. Louis, and after that the public has until July 11 to voice any objections or concerns. The sale hearing will follow on July 16 also in St. Louis.
Mid America Brick filed for Chapter 11 bankruptcy on Feb. 15, listing $16 million in debt. The company reportedly has 50-99 creditors, estimated assets of $1 million to $10 million and estimated liabilities of $10 million to $50 million.
Its secured debtors include Community South Bank, owed $3 million; the city of Mexico, $1.4 million; and the Missouri Department of Economic Development, owed $1 million.
MAB CEO Frank Cordie stated in February he was seeking a partner as part of an asset purchase transaction or a recapitalization of the company.
City of Mexico officials said this morning it's still too early in the process to comment on MAB's situation and the stalking horse bid.
Mid America Brick used funding from Advantage Capital, Rand Capital, Environmental Liability Transfer and other investors to buy, revamp and operate the former A.P. Green Refractories facilities which closed in 2002. Mid America Brick was founded in 2010 and began producing brick in summer 2011. Advantage Capital Partners provided $9.75 million of the $21.9 million total project financing needed to re-open the plant. Mid America Brick also obtained funding from neighborhood Improvement District bonds, a Missouri Department of Economic Development loan, Brownfield tax credits, a Community Development Block Grant and other incentives.
According to Rauschelbach, MAB is currently packaging brick, but they are not at full staff and not currently manufacturing.