U.S. BANKRUPTCY COURT Solvency by June, WCI chief says

The steelmaker also is planning $35 million in upgrades.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
WARREN -- WCI Steel executives hope to bring the company out of bankruptcy protection by June with about $35 million in funding for major mill upgrades.
Edward Caine, WCI president and chief executive, said Monday in U.S. Bankruptcy Court in Youngstown that hundreds of financial and operational issues must be worked out by then.
The Warren steelmaker is shooting for June because it has scheduled a critical relining of its blast furnace for June 4, Caine said. For the $13 million project to begin, WCI must have its future financing in place as part of its reorganization plan.
WCI also hopes to spend $25 million to install another type of new furnace shortly after leaving bankruptcy court, Caine said.
Extension
Judge William Bodoh gave WCI a 120-day extension to file its reorganization plan, despite an objection from the steelmaker's bondholders. WCI now has until May 14 to file the plan.
Thomas Mayer, a lawyer for the bondholders, said, however, that WCI must settle on the plan by early February to meet court time lines for having the plan reviewed by other parties. He said WCI has made no commitment to having the plan completed by then, even though it has been negotiating a financial deal with the bondholders since May, four months before it filed for bankruptcy protection.
He asked the judge to set a time line that WCI would have to meet as it works on the plan, but Judge Bodoh didn't include that in his ruling.
Judge Bodoh said granting extensions for filing a plan is normal and is warranted in a case as complex as WCI's. Bankruptcy law gives companies 120 days to file a plan after filing for protection.
Throughout the case, WCI has been at odds with its bondholders, which includes Wilmington Trust Co. and 12 other lenders. The judge hasn't ruled on an earlier request by the bondholders to prevent WCI from making any more contributions to its pension fund. They think the money should come from WCI's parent, Renco Group, or Renco's profitable subsidiary, AM General, which produces the Hummer vehicles for General Motors.
Caine said he expects that WCI's business plan and a strategic plan will be completed in a matter of weeks.
Relining of blast furnace
He agreed with a bondholders' lawyer that not relining the blast furnace would be fatal for the mill because the maintenance work must be done periodically. It was last performed in 1995.
Caine said WCI hopes to assure its customers of the soundness of the blast furnace by scheduling the work for June. He noted that in mid-November the blast furnace was forced to shut down for a weekend because of a chemical reaction and fire.
WCI has spent $3 million to buy materials for the relining but will need about $10 million to complete the work, he said.
The second capital improvement project planned is a walking beam furnace, which could replace existing equipment that reheats slabs of steel during processing.
The new furnace would upgrade the mill's quality, Caine said. Instead of slabs being pushed along, which can create defects on the bottom of the slab, the new machinery would lift and place the slabs as they travel.
Caine said the new equipment isn't imperative to operating the mill but is needed if WCI wants to be a leader in producing quality steel.
WCI also is bargaining a new labor contract with United Steelworkers of America Local 1375. The union represents about 1,400 of the mill's 1,800 workers.
shilling@vindy.com