Delaware General Assembly






BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Three-quarters of all members elected to each House thereof concurring therein):

Section 1. Public Purpose and Finding of Emergency

It is the purpose of this Act to prevent the severe impact on the economy of the State of Delaware which would result from the financial collapse of the Phoenix Steel Corporation (hereinafter referred to as "Phoenix") and to facilitate the return of Phoenix to a position of financial viability through a program of limited State financial assistance. Without the limited financial aid authorized by this Act, it is likely that Phoenix's facility located at Claymont, Delaware (hereinafter referred to as the "Claymont Facility"), may imminently cease operations. which would have important adverse impacts upon the State and its citizens. This imminent threat presents an emergency necessitating this Act.

Section 2. Establishment of Board

There is hereby established the State of Delaware Emergency Loan Board (hereinafter referred to as the "Board") composed of the Director of the Delaware Development Office, who shall be the Chairman of the Board, two persons to be appointed by the Governor, one person to be appointed by the President Pro Tempore of the Senate of this State and one person to be appointed by the Speaker of the House of Representatives of this State.

Section 3. Authority

The Board shall. on behalf of the State, make, from funds appropriated hereunder, loans on an unsecured or secured basis to Phoenix as provided herein. All loans to be made hereunder shall be made pursuant to the limitations and conditions set forth hereinafter and pursuant to such other terms and conditions as the Board, in its sole discretion. shall approve.

Section 4. Administration

(a) The Board shall, on behalf of the State, administer any loan made hereunder, including. without limitation, making all determinations as to whether any such loan is in default and taking any actions it deems appropriate as a result of any default.

(b) The Board shall act only:

(1) at a meeting at which a majority of its members Is present. which majority shall constitute a quorum of the Board for all purposes; or

(2) as provided herein, through any one or more of its members duly appointed as agent of the Board. The Board may act through Its duly appointed agent for all purposes and at all times, except that the vote of the Board itself shall be required to approve the making of any loan hereunder and any loan documentation necessary to implement the terms of this Act and to declare or waive any default under the terms of any loan made hereunder. The Chairman of the Board, or in his absence any member of the Board duly authorized by the Board to do so. may execute on behalf of the Board all papers and documents which are appropriate to carry out the terms of this Act.

(c) When in its judgment it is appropriate to do so. the Board may retain the services of experts and consultants and may. notwithstanding any other provision of law, retain as its legal counsel special legal counsel to the Delaware Development Office. The Board may authorize the payment of and may pay the reasonable fees of such experts. consultants and counsel from monies appropriated by this Act.

Section 5. Limitations and Conditions

(a) From time to time under this Act, the Board shall make one or more loans only if the Board determines at the time any such loan is made that a trade creditor, financial institution or other person or entity other than the State has extended, or has committed to extend, credit to, or has made, or has committed to make, any investment in, Phoenix acceptable to the Board in at least the amount of the loan to then be made hereunder.

(b) All loans made by the Board on behalf of the State pursuant to this Act shall:

(1) together with the principal amount of all other loans theretofore made hereunder, have a total principal amount of not more than One Million Dollars ($1,000,000.00);

(2) be repayable in full on or before December 31, 1984;

(3) bear interest at a fixed rate, payable monthly, equal to the average rate earned by the State on its deposits at the time funds are advanced;

(4) be made solely for the purpose of providing working capital for the Claymont Facility;

(5) be made pursuant to a loan or other agreement that provides that:

(A) At or prior to the time that funds are disbursed in connection with the initial loan made hereunder, Phoenix shall pay to the State for its expenses the sum of One Hundred Thousand Dollars ($100,000.00) from surplus funds contained in the Rental Reserve Fund created under the Trust Indenture dated as June 1, 1976, between the predecessor of The Delaware Economic Development Authority and the Bank of Delaware, as trustee;

(B) The loan shall constitute an administration expense having the priority of an administration expense under the federal Bankruptcy Code;

(C) At least the following acts. omissions and events shall constitute events of default:

(i) The Claymont Facility ceases or materially reduces operations under circumstances wherein the Board has not been provided with assurances adequate in its view that such operations will be resumed at a date and level of activity acceptable to the Board;

(ii) A material portion of the assets located at the Claymont Facility are sold, leased or otherwise disposed of before all of the loans made hereunder have been repaid in full; and

(iii) A determination made by the Board, in its sole discretion, that less than all of the proceeds of the loan are being used for working capital at the Claymont Facility.

Provided that the Board may in its sole discretion elect to waive any default occasioned by an event stated in this subsection (C) upon a determination by the Board that the public interest would be served thereby.

Section 6. Extension of non-conforming use of basic steel manufacturing

Amend Section 7003, Chapter 70, Title 7 of the Delaware Code by adding the following sentence:

A basic steel manufacturing plant in operation on June 28, 1971, may continue as a heavy industry use in the coastal zone notwithstanding any temporary discontinuance of operations after said date provided that said discontinuance does not exceed one year.

Section 7. Conditions Subsequent to Initial Loan

(a) Within ninety (90) days after the making of the initial advance of funds under this Act, the terms of all loans outstanding hereunder shall be amended to provide, and all loans made hereunder thereafter shall provide, that:

(1) Phoenix will not sell, lease or otherwise dispose of a material portion of the assets located at its Phoenixville. Pennsylvania facility (hereinafter referred to as the "Phoenixville Facility') unless all loans outstanding hereunder have been repaid in full;

(2) the sale, lease or other disposition by Phoenix of a material portion of the assets located at the Phoenixville Facility without having repaid in full all loans made hereunder shall constitute a default under all loans made hereunder and, in the event of such default, the Board shall make no further loans hereunder;

(b) In the event that the conditions set forth in Section 7(a) hereof are not satisfied within the period of time specified therein, the Board shall make no further loans under this Act and the Board may declare any and all loans outstanding hereunder to be in default.

Section 8. Final Assistance

This Act constitutes the only assistance that the State will extend to Phoenix: no further appropriations in the nature of the financial support extended hereunder shall be made for Phoenix's benefit.

Section 9. Appropriation

There is hereby appropriated to the Delaware Development Office the sum of One Million One Hundred Thousand Dollars ($1,100,000.00) for the purpose of funding a special fund of the State to be used as directed by the Board to fund any loan made hereunder, and to pay any fees, costs or expenses previously incurred or hereafter incurred by or on behalf of the State in connection with Phoenix's obligations to the State in connection with this Act or otherwise.

Section 10. Reversion to the General Fund

This Act is a supplemental appropriation and the monies appropriated shall be paid by the State Treasurer out of the monies in the General Fund not otherwise appropriated. Monies hereby appropriated shall not revert until the full satisfaction of all obligations to the State arising hereunder, and at such time all monies remaining in the special fund created by Section 9 hereof shall be returned to the General Fund.

Section 11. Ratification

in the event that it shall be determined by a court of competent jurisdiction that any member of the Board is not eligible to serve, any acts taken by the Board during such member's tenure may be ratified by a majority of those members of the Board properly serving, and such ratification shall relate back to the date of such act.

Section 12. Severability

if any provision of this Act, or the application thereof to any person or circumstance, is held or determined to be invalid, ineffective or unenforceable, such invalidity, ineffectiveness or unenforceability shall not affect any other provision or application of this Act that can be given effect without the invalid, ineffective or unenforceable provision or application, and to that end the provisions of this Act are declared severable.

Section 13. Effective Date

This Act shall become effective immediately upon its due enactment into law.

Approved March 28, 1984.