The auction for bankrupt Signal International Inc. was canceled because there were no qualified bidders other than the stalking horse. The sale, originally set for Oct. 14, will instead be dealt with at a court hearing Nov. 24.
When Signal filed for protection in July, the Teachers’ Retirement System of Alabama and Employees’ Retirement System of Alabama, which own about 47% of Signal’s shares, agreed to provide about $90 million in bankruptcy financing and serve as a stalking horse bidder. Since then, the company has been shopped around to possible domestic and international buyers with bids due Tuesday.
Several yards did due diligence and one said it was going to bid but didn’t, said J. Scott Victor, managing director of SSG Capital Advisors, which was handling the sale. The stalking horse bid of “$94 million was the starting price, and that’s a big number.”
The retirement systems are going to run the yards with existing management as an equity holder and debt holder, he said.
The Chapter 11 filing came as the company was hurt by falling oil and gas prices and faced $20 million in federal court claims for allegations of abusing Indian guest workers Signal was expected to keep its Mobile, Ala., and Pascagoula, Miss., yards and 302 employees working.
As part of the court settlement, Signal issued an apology to the workers saying it “deeply regrets the living conditions the guest workers were subjected to,” according to a copy of the letter from CEO Richard Marler posted on the site of the Southern Poverty Law Center (SPLC), which represented the workers in the case.
“Signal has learned from its mistakes and is committed to ensuring the experiences of the guest workers and their families will not be repeated,” the Sept. 22 letter said.
Signal hired about 500 welders and shipfitters from India through a recruiting service on H-2B visas to handle increased business after Hurricane Karina in 2005. The workers claimed they lived in substandard conditions for which they were charged $1,050 a month and had to pay as much as $20,000 each for a job.
“This is a significant gesture by Signal International. Their apology is evidence of the reforms desperately needed within the federal H-2B guest worker program. While the apology is unique, this sort of misconduct is not,” said Jim Knoepp, SPLC deputy legal director.
Signal could not be reached for comment Wednesday.