WARREN WCI's leaders work to keep lenders satisfied

Other Renco companies' problems have no bearing on WCI, its president said.
THE VINDICATOR, YOUNGSTOWN, OHIO
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- Plenty of issues vie for WCI Steel president Edward Caine's attention these days, but keeping the beleaguered company's bond holders and lenders happy ranks close to the top.
Unhappy bankers or bond holders could force the troubled steelmaker to file for federal bankruptcy protection, he said, and WCI's management team wants to avoid that at all costs.
Officials also have said they have no plans to file voluntarily for bankruptcy protection. They're determined to restructure the company and to make it profitable again without getting anywhere near a bankruptcy court, Caine added.
"The hazard in our legal world is that if any three parties decide to get together and say that they legally have been injured, they have the right to force an involuntary bankruptcy," he explained. "That's why you have to keep these people satisfied."
Debt
WCI has a long-term secured note debt of $300 million for improvements made to the mill's continuous caster and ladle metallurgy complex in the early 1990s.
The company said this week that it cannot make a $15 million interest payment on that debt due June 1, but officials are negotiating with the bond holders and may be able to make the payment within the 30-day grace period. WCI has hired Jefferies & amp; Co., a New York City investment banker, to act as its financial adviser in restructuring its secured notes.
Other bankruptcies
Two other companies owned by Renco Group Inc., WCI's parent company, were forced into bankruptcy by their bond holders two years ago. Caine said those bankruptcies have no bearing on WCI, however.
"There is no direct link between WCI and other Renco holdings except for the fact that we share the same owner," he said.
Lodestar Holdings, a coal company in Kentucky, and Magnesium Corp., a magnesium producer in Utah, both filed for Chapter 11 bankruptcy protection in 2001. The magnesium company has emerged from bankruptcy and is operating under a new name, U.S. Magnesium, still under Renco ownership.
Renco also owns AM General, the South Bend, Ind., company that manufactures the Hummer and the Hummer H2 sport utility vehicles for General Motors.
WCI announced a three-pronged restructuring plan this week aimed at reversing the company's persistent losses.
The plan, devised with the help of Metal Strategies, a Pennsylvania company specializing in strategic planning for metals businesses, requires lenders to approve reduced payments for WCI. A revised, cost-cutting contract with the United Steelworkers of America and a "substantial cash infusion" from Renco are also part of the plan.
Caine said more details will be released when the company issues its second quarter financial report to the Securities and Exchange Commission, probably later this month.
WCI already has reported it lost $13.4 million in the three months ending April 30 and lost $17.5 million in the first half of fiscal 2003. Losses for 2001 and 2002 topped $138 million.
vinarsky@vindy.com