STEEL INDUSTRY Creditors vying for Weirton take go-it-alone path

MORGANTOWN, W.Va. (AP) -- The creditors challenging International Steel Group's bid for bankrupt Weirton Steel said that they are determined to turn their debt into equity by reviving the aging mill.
The Informal Committee of Secured Noteholders submitted a bid of $261.2 million to Weirton on Tuesday and expects to be granted a seat at a Monday auction in Pittsburgh, where it will square off against ISG.
"We see Weirton not just as a good investment in and of itself, but as a platform for growth," said Ron Buck, a principal with New York's Corsair Partners, a member of the note-holder committee. "Our plan would also keep Weirton as an independent company and give it greater control over its own destiny."
ISG's offer
Cleveland-based ISG, the nation's second-largest integrated steelmaker, offered $255 million for Weirton and already has a five-year contract agreement with the 3,000-member Independent Steelworkers Union.
But the note-holders are prepared to offer the union a similar contract and contend their offer is more attractive in several ways.
Their business plan calls for significant reinvestments in the mill, including the completion of long-deferred maintenance projects. Any profits turned in the first few years would be reinvested or used to pay off debt, the committee says, not distributed to shareholders.
The group also plans to give ISU President Mark Glyptis a seat on the board of directors, a position he holds with Weirton.
Weirton officials have declined to reveal whether any other bidders met the Tuesday deadline to try to beat ISG's offer. The note-holders and any other parties will be notified by Friday whether they can take part in the closed-door sale.
The note-holders' bid is $138.74 million -- $97 million of assumed liabilities and a credit bid of $25.5 million.
Panel means business
To show it is serious, the committee has put up its own money and chosen a transitional management team led by John Correnti, former president of North Carolina's Nucor Corp. Correnti was among the candidates to replace former Weirton CEO John H. Walker when he left last summer.
The note-holders have consistently opposed the ISG sale in court, arguing it undervalues Weirton, the nation's No. 2 producer of tin.
ISG's offer came at a time when Weirton's situation looked bleak. The company had been in bankruptcy for nine months, and it was struggling with both a shortage of coke and suppliers who were reluctant to ship materials because of its precarious financial position.
On March 8, when U.S. Bankruptcy Judge L. Edward Friend II put the sale to ISG on a fast track, liquidation seemed a real possibility.
Since then, however, Weirton has benefited from rising prices for hot band steel, selling off inventory, paying down loans and increasing liquidity. The coke shortage is easing, and with the whole industry on the uptick, the note-holders argue Weirton has options other than ISG.