Judge rebuffs creditors' attempt to derail ISG purchase

Creditors offered more money, but the judge called ISG's offer the best.
WHEELING, W.Va. (AP) -- A judge refused Monday to delay International Steel Group's purchase of Weirton Steel beyond the 10 days required under federal bankruptcy law, rejecting claims that no harm would be done by slowing the process.
Judge L. Edward Friend II ruled in writing, without a hearing on the motion filed late Friday by a group of creditors who had sought to derail the deal with ISG by offering more money.
In allowing the sale to proceed last week, Friend accepted the arguments of Weirton and ISG supporters who argued the Informal Committee of Senior Secured Noteholders would most likely be unable to complete the sale. He also said the small independent company could no longer survive on its own in a rapidly consolidating U.S. steel industry.
Offer
The creditors had offered $364 million for the nation's No. 2 producer of tin, while Ohio-based ISG offered $237 million.
ISG's bid, however, was backed by a larger amount of cash and a five-year labor agreement with the Independent Steelworkers Union, whose president said there was a "near-zero possibility" of coming to terms with the noteholders.
In a two-page ruling Monday, Friend said he was confident ISG's offer was the highest and best, and that the noteholders' arguments will fail if appealed to U.S. District Court.
The West Virginia Workers' Compensation Commission also objected to the sale. Weirton is self-insured, and the deal with ISG would leave the state with a $70 million liability that may have to be made up by other subscribers.
The noteholders argued they would be irreparably harmed if ISG closes on the deal with Weirton by May 4 as projected.
The sale would give them only $20 million for what they claim is a $145 million debt. But partly because of the low prices at which the noteholders' bonds have been trading, the judge set the value of their collateral at $17 million.
The bondholders also argued no harm would be done by delaying the sale, but Friend disagreed.
Since entering Chapter 11 in May 2003, the company has lost $93 million.
If the sale is finalized, ISG would surpass Pittsburgh-based U.S. Steel as the largest domestic integrated steelmaker.
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