WCI lenders target pension payments

They want the parent company to make the payment and plan to file a suit.
& lt;a href=mailto:vinarsky@vindy.com & gt;By CYNTHIA VINARSKY & lt;/a & gt;
VINDICATOR BUSINESS WRITER
YOUNGSTOWN -- WCI Steel's major lenders will keep trying to stop the struggling steel mill from funneling millions of dollars into its underfunded pension plan, their attorney said, even if a judge makes the fight more difficult.
Judge William Bodoh of U.S. Bankruptcy Court here heard arguments on the pension issue Tuesday and is expected to issue a ruling soon.
The Wilmington Trust Co. and 12 other secured lenders which hold $300 million of WCI's long-term bonds tried unsuccessfully to block WCI from making a $5 million payment to the pension fund in November.
The company, which filed for Chapter 11 bankruptcy protection in September, made the $5 million contribution and has another similar payment due in February.
Judge Bodoh overruled the bondholders' request for an injunction then, arguing that the lenders had other legal alternatives available.
Thomas M. Mayer, the bondholders' attorney, said the lenders are taking the judge's cue and pursuing another legal alternative. They are asking the court to let them file a lawsuit to block future pension payments and to take back the $5 million contribution made last month.
Lenders' argument
The lenders maintain that WCI's parent company, New York-based Renco Group, is ultimately responsible for the pension fund and that WCI cannot afford to pay it.
They argue that continuing to fund the plan will drain the company's resources and jeopardize its effort to restructure and become profitable.
"We have nothing against the workers or the retirees, and we want them to get their pensions," Mayer said. "We just think that WCI's wealthier big brother Renco should be the one paying them."
WCI and the United Steelworkers of America, which represents the mill's 1,400 hourly workers, argue that the company is legally obligated to make the pension payments under its collective bargaining agreement with the union.
They also argue that continuing the payments is important as the company negotiates for changes in the union contract as part of its restructuring.
Renco Group and the Pension Benefit Guaranty Corp., a federal agency that guarantees payment of basic pension benefits for 35,000 private-sector defined benefit plans, also have argued that WCI is legally bound to pay its pension contributions. The plan is underfunded by more than $100 million.
& lt;a href=mailto:vinarsky@vindy.com & gt;vinarsky@vindy.com & lt;/a & gt;