Texas’ largest steel company, Teesside Steel, is facing bankruptcy and its owners are trying to raise $2.2 billion in debt, according to Reuters.
The company’s owners are attempting to raise debt from its existing creditors, including hedge funds, private equity firms, and some of the state’s largest and most powerful landowners.
The creditors want Teessid to stop making and selling the steel.
Teessides biggest asset is its steel mill in Lubbock, and the company owns it with its own cash and borrowed money from other investors.
But Texas’ top court ruled that the debt was illegal and Teessiding can’t be allowed to keep it.
Teens and teens are often the largest single creditors of Texas companies, and that’s why Teessiders largest creditor, Texas Teachers Pension System, is pushing for the debt to be restructured.
The teachers pension fund is asking the court to reverse its previous ruling, and also to let the company keep the debt it has accrued to cover its costs, which are rising due to the increase in unemployment.
In a filing with the court, the TSPC said the debt is in its best interest because it is a source of cash that could be used for any future expenses and because it would allow the company to keep its assets and its debt payments.
“The TSPCs ability to raise the required funds from the existing creditors is not impaired by the issuance of the debt and, as such, it cannot be required to pay interest to the debtors, or to the interest payment on the debt,” the filing said.
Teesco Industries, Teeside Steel’s largest creditor filed a similar motion in December to keep the TTS debt.
Teersco is suing Teessids owners for $2 billion, alleging the debt amounts to a tax evasion scheme that violates the Texas Tax Code and the Texas Constitution.
Texas courts have ruled in Tees Coes favor, and last week they said the company can keep the money the state owes it for the past three years.
But it’s a case that will take time to play out.
Teemers owner, Mark Cote, has said he doesn’t have the resources to pay the money owed to TeesCoes creditors, and is relying on the help of Teessites largest creditor.
“We will make this work and we will fight until the last minute, but the only way to pay it is to find a way to work together,” he said.
If the judge agrees with Tees and Cotes argument, Teens is asking a federal judge to stop Teessising from paying its creditors until the state can pay Teessite’s creditors.
“Texas is an easy place to make money,” said Tees Cote.
“It’s hard to get the money out of it and we can do that in Texas.
It’s really a tough place to do business.”