The Itasca County Board of Commissioners on Wednesday changed course and unanimously approved the transfer of key land leases to a potential buyer of the assets of bankrupt Magnetation Inc.
The board on Monday had unanimously opposed the transfer, citing concerns about the county facing financial liabilities if the buyer ran into difficulties.
But in meetings Tuesday and Wednesday, a new agreement was reached that "minimizes the financial risk to the county" if the sale of Magnetation goes through, County Board Chairman Rusty Eichorn said.
"We have a better agreement to move forward with the potential sale, and it provides better protection for the county," he said.
Oral arguments will be made on the proposed sale today in federal bankruptcy court in St. Paul. Magnetation officials have said that the sale is the last, best hope to reopen the company's three iron ore recovery operations on the Iron Range.
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Grand Rapids-based Magnetation filed for bankruptcy in 2015 and closed the last of its plants in October. Magnetation officials last week filed a plan in bankruptcy court to sell all remaining assets to Roanoke, Va. businessman Tom Clarke, owner of newly formed ERP Iron Ore.
Clarke told the News Tribune last week that the purchase agreement had won approval from nearly all players in the bankruptcy, including major creditors, contractors and vendors. But he said one major issue remained - the ongoing legal action in state court by some contractors who filed a mechanic's lien against Magnetation's Plant 4 near Grand Rapids. Because that plant is on land leased from Itasca County, the contactors have alleged in court that Itasca County is liable for the project's debts.
Itasca County officials aren't against the shuttered Magnetation operations resuming, but they had withheld offering the leases to any bankruptcy heir to Magnetation; Clarke said last week that without the county leases, the sale won't go through.
Eichorn said the agreement voted down on Monday had left the county with too much financial liability. On Tuesday and Wednesday, new language was crafted to minimize that risk. It represents an "amicable agreement" between the county and ERP, he said, with a successful sale of Magnetation promising relief for the contractors who are owed money.
