Creditor group argues for alternative takeover plan

By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- The creditor group vying for the chance to buy WCI Steel away from its wealthy New York owner isn't likely to give up the fight anytime soon, according to its attorney.
Atty. Thomas Moers Mayer, legal counsel for creditors who hold $300 million of WCI's secured notes, said the group doesn't think the reorganization plan the steelmaker filed this week is the best possible alternative for bringing the company out of bankruptcy.
"We think there are better alternatives available," he said. "We don't believe the judge can or will approve it as it is."
Under WCI's plan, filed Tuesday in United States Bankruptcy Court in Akron, the company would emerge from bankruptcy protection and continue operating under its present owner, New York-based Renco Group.
Renco would pump $35 million more into the company and has agreed to fund its pension plan for retirees, provided that members of United Steelworkers of America Local 1375 approve a tentative new contract with WCI.
Much to lose
The note-holders may have more to lose under the company's plan than any other creditor. WCI is offering to issue them new notes valued at $94 million, less than a third of the face value of the $300 million in notes they now hold.
Moers Mayer said his clients are not ready to comment specifically on how WCI's plan would repay the company's debts. He complained that he was the only attorney of many involved in the company's Chapter 11 case who was not permitted to show the plan to his clients until it was officially filed.
The note-holders have also circulated a plan proposal for buying WCI and bringing it out of bankruptcy as an operating company. They can't submit that plan to the court, however, because WCI has the exclusive right to offer its own plan until mid-May.
Moers Mayer said the note-holders are challenging that exclusivity, and a hearing on the issue is set for 9:30 a.m. May 4 in the Akron court.
The note-holders, along with other creditors who would not be repaid in full under WCI's plan, will have the right to vote on the plan sometime in June, provided bankruptcy Judge Marilyn Shea-Stonum approves it.
Company plans
WCI had initially planned to emerge from bankruptcy in early June, but a company attorney said the target date has been pushed back to sometime in July. Tim Roberts, a WCI spokesman, said the delay won't hamper plans to begin a crucial, $13 million blast-furnace relining project set to begin June 4.
Meanwhile, WCI reported it made $1.9 million on sales of $53.6 million in March, its second consecutive month in the black since it filed for bankruptcy protection in September.
The company had operating income of $3.22 million for the month, but the total was diminished by $458,000 in interest payments and $839,000 in professional fees related to its Chapter 11.
For the period from September through March the company reported a loss of $15.7 million on sales of $286 million. Over that time it paid $4.2 million in professional fees for attorneys, financial advisers and others working on the bankruptcy case.
vinarsky@vindy.com