Battle for WCI Company, lenders push own plans

A judge will decide which framework will be used for the steelmaker's comeback.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
YOUNGSTOWN -- WCI Steel's secured bondholders say they have a reorganization plan that would allow the troubled steel company to emerge from bankruptcy on schedule in June, and they want a federal bankruptcy court judge to let them file it.
Under bankruptcy law, WCI had the exclusive right to submit a reorganization plan for 120 days after its Chapter 11 bankruptcy filing in September 2003, and a federal bankruptcy judge later agreed to extend that exclusivity period through mid-May.
Wilmington Trust Co., trustee for the lenders, which hold $300 million of WCI's long-term notes, however, filed a motion this week asking bankruptcy Judge Marilyn Shea-Stonum to terminate that agreement.
They argue that the lenders' reorganization plan is the only plan available that will allow WCI to follow its own timetable for emerging from bankruptcy.
Company officials have said that they want to emerge in June so that they can go forward with a critical, $13 million relining of its blast furnace and can install another necessary $25 million furnace upgrade.
Details of the lenders' plan have not been released, but an attorney representing WCI has said that all interested parties, including the lenders, have been looking at continuing mill operations, not liquidation.
A hearing on the motion is set for 9:30 a.m. April 8 in the federal bankruptcy court in Akron.
Working with union
In the motion, the lenders say the company has not filed a plan for reorganizing and has not responded to the plan proposal Wilmington Trust submitted last month. WCI's "half-hearted" efforts to find a buyer have been "based on financial data calculated to deter buyers rather than attract them," the motion states.
Wilmington Trust Co. said it has been "in active discussions" with the United Steelworkers of America, which represents hourly workers at WCI, on both a plan and a collective bargaining agreement.
"The USWA has authorized the secured note holders to state ... that the USWA supports termination of the debtors' exclusive period," the motion states.
Mike Rubicz, president of USWA local 1375, said he could not comment on the union's talks with the bondholders or its talks with Renco Group, WCI's New York-based owner.
"I'm just pleased to hear that more than one buyer is interested in WCI," Rubicz said. "That is a positive thing. I think it's good for the workers, the retirees and the community."
Working capital
The note holders have sufficient equity capital to fully fund their plan, the motion states, and has three lending institutions lined up which are ready to provide full working capital for the mill.
Wilmington Trust Co. is the same entity that filed a lawsuit against WCI last fall to try to stop the beleaguered company from funneling millions of dollars into its underfunded pension plan. WCI pays about $5 million a quarter to the plan, which is underfunded by more than $100 million.
The lender group is arguing that WCI cannot afford to pay its pension debts and that its wealthy parent company, Renco, is ultimately responsible for the bill.
vinarsky@vindy.com