A Sandy-based real estate developer walked away Thursday as the winning bidder in an auction for Geneva Steel's 1,700 acres of land.
Anderson Development LLC's offer of $46.8 million for the industrial site beat out a bid of $46.6 million by Utah Lake LLC, which had the financial backing of New Jersey-based Prudential Real Estate Investors.
The two developers battled all afternoon in a closed-door auction at a downtown Salt Lake law office over the purchase of the Vineyard-based steel mill's last major asset, each hoping to capture a chunk of lakeside property and turn it into a mixed-use development.
"This is a big step forward for the next stage of that site," said James Markus, Geneva Steel's Chapter 11 trustee. "I think the Anderson people are really going to help move the site forward. It will be a changed site in five years."
Anderson is expected to close on the deal within 40 days. A bankruptcy judge must still approve the sale.
Michael Hutchings, attorney for Anderson Development, did not immediately return calls seeking comment. Hutchings recently told the Deseret Morning News the company plans to develop the site for residential, commercial and light industrial uses. Anderson Development already owns 320 acres of property adjacent to the mill.
Elsewhere in the state, Anderson is one of several property developers suing Summit County, arguing that its planning department and county commissioners have required exorbitant fees or gifts to the county for higher-density developments.
The sale of Geneva's land is expected to help pay off its unsecured creditors, who are owed roughly $75 million.
Markus said he expects unsecured creditors will capture 50 percent or more of what they are owed. "I believe the perception of unsecured creditors at the beginning of this year was they were looking at 20 or 25 cents on the dollar," Markus said.
J. Thomas Beckett, an attorney for the unsecured creditors committee, said it was very pleased with the sale. Beckett added that recovering 50 percent of what they are owed was "pretty extraordinary" for a steel company liquidation.
In June, Utah Lake Development offered $44.5 million for the property. At that time, the next-highest bid was by Anderson Development for $32.6 million. But on Thursday, Anderson Development raised the stakes, first offering $46.3 million for the property, leading Utah Lake's team to offer $46.6 million.
Under the sales agreement, Anderson Development will assume all responsibility for any remaining demolition and environmental remediation work, something that could cost tens of millions of dollars.
Last year, a bankruptcy court judge approved a $42 million environmental cleanup plan for the Geneva site. Under that plan, Geneva's former managers and its former owner, U.S. Steel, agreed to share in the cleanup costs, with Geneva paying $12 million and U.S. Steel the remaining 75 percent of total costs.
The losing bidder won't go away empty-handed. Under the auction rules, Utah Lake is entitled to $1.3 million in so-called breakup fees, which allow the company to recapture its due-diligence costs.
Vineyard-based Geneva, which has been in bankruptcy since January 2002, already has sold its core steelmaking equipment to a Chinese firm for $40 million. In March, Geneva sold its water rights for $88.5 million to the Central Utah Water Conservancy District. The estate still is expected to sell its emission credits, Markus said, and could realize more revenues from outstanding litigation matters.
Earlier this summer, the mill's three blast furnaces, nine stoves and two stacks were demolished.