WEIRTON STEEL Group weighs appeal over rejected bid

The rejected offer from noteholders is $126 million higher than ISG's bid.
WHEELING, W.Va. (AP) -- International Steel Group is so confident its buyout bid for Weirton Steel will pass judicial muster that it's already begun scheduling orientation meetings for the 2,100 workers it plans to hire.
But even if U.S. Bankruptcy Judge L. Edward Friend II does sign off on the deal and help the Cleveland-based upstart become the nation's largest integrated steelmaker, it won't be the end of the line: A group of creditors whose bid was rebuffed is likely to appeal in U.S. District Court.
"We're obviously going to seriously consider it," said Lisa Beckerman, lead attorney for a group of creditors willing to pay $126 million more than ISG for the nation's No. 2 tin producer.
Friend was set to convene what promised to be a lengthy hearing on the sale today, with Weirton President and Chief Financial Officer Mark Kaplan among those expected to testify first. Other board members have been subpoenaed, and the hearing could take at least two days.
Competing offers
According to documents Weirton filed with the court late Monday, ISG is offering $237.5 million, while the Informal Committee of Senior Secured Noteholders is offering $364 million.
ISG's bid has about $12 million more in cash. The creditors raised their offer by including a credit bid of nearly $131 million -- meaning money they are owed by Weirton Steel but are willing to forgive as part of a sale.
Although Weirton wants a judge to approve ISG's bid, the noteholders contend their offer serves all parties better, even offering payments to administrative and unsecured creditors who would get little or nothing with ISG. Weirton attorneys said the creditors' ability to consummate the sale is "speculative at best," with too many conditions to deem their bid the highest and best.
ISG spokesman Brian Kurtz, meanwhile, said his company has a track record of closing deals.
Alternative
If the sale with ISG is not approved, Weirton could still be forced into liquidation, attorney Mark Freedlander said. The noteholders still need a firm commitment for $250 million in financing, a favorable coke-supply agreement and a contract with the Independent Steelworkers Union.
Tom Thompson of Imperial Capital LLC said the union has been unwilling to negotiate with the creditors but would fare better under their plan to keep Weirton a stand-alone company.
"We're offering the same deal that ISG offered, plus a sweetener," he said. Instead, Weirton and the union have agreed to what he called "a fire sale price" that essentially lets ISG buy Weirton for the value of its receivables, he said.
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