WARREN WCI Steel gets OK to borrow

Bankruptcy means the company must ask permission for routine business.
THE VINDICATOR
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- WCI Steel won bankruptcy court approval Tuesday to borrow $2.36 million for casualty and property insurance and will pay the remaining $1.25 million in cash.
The company said it would have preferred to pay its $3.57 million in insurance premiums under an installment plan, but its insurance carriers were unwilling to extend unsecured credit to the financially troubled steelmaker. The financing arrangement will cost WCI an additional $37,776 in interest charges.
A.I. Credit Corp. of New York will finance the premiums WCI has with five insurance companies, and the insurance coverage runs through Sept. 30, 2004. Financing insurance payments is often part of the normal course of business for large companies, said Atty. Christine Murphy Pierpoont, part of the legal team representing WCI in its Chapter 11 bankruptcy case.
The Warren steelmaker must seek court permission even for routine procedures as long as it is operating under bankruptcy court protection, she explained.
Financing plans
WCI's next hearing in U.S. Bankruptcy Court in Youngstown is set for 10:30 a.m. Tuesday. Judge William Bodoh will consider two proposed financing plans to keep the company operating while it works to restructure its debts. The company is operating now under an interim financing arrangement with Congress Financial Corp., Bank of America and a group of other lenders. The Renco Group, WCI's New York-based parent company, has offered a $10 million loan as part of that package.
A competing lender, Harbert Management Corp., is also offering a financial package. Attorneys for Harbert say its proposal would give WCI more additional operating cash than the Congress plan, its fee would be less and the funding period would be longer.
WCI filed a voluntary Chapter 11 petition Sept. 16 and is continuing to produce steel. Officials say they plan to reorganize, with plans to emerge from bankruptcy protection a stronger, more competitive company. The company employs about 1,800.