WCI STEEL Creditors will decide on reorganization plan

Ballot packages will be mailed to creditors by Friday.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- WCI Steel's creditors will have two reorganization plans to choose from when they vote on the future of the Warren company and its 1,700 employees.
Federal bankruptcy Judge Marilyn Shea-Stonum has approved rival plans, one from WCI and the second from a group of creditors that holds $324 million in bonds, secured by the plant, its property and equipment.
Both plans call for restructuring WCI's debts and continuing steel production at the mill, which has been operating under Chapter 11 bankruptcy protection since last September.
G. Christopher Meyer, an attorney representing WCI, said ballot packages, which will include disclosure statements describing the plans, will be mailed to the company's creditors no later than Friday.
The ballots must be returned by July 16. A series of hearings to confirm a plan will begin at 1:30 p.m. July 21 in the federal bankruptcy court in Akron, he said, likely continuing through July 22 and 23. Only one of the two plans can be confirmed.
Who votes
WCI owes money to several hundred large and small creditors, but not all will get to vote on the plans.
Under bankruptcy law, creditors are divided into classes based upon the type of debt and the amount owed.
Some are labeled "unimpaired," meaning they can expect to be paid in full under the plan or their legal rights would be unchanged. Those unimpaired creditors do not get to vote.
Creditors to be paid less than they are owed, or who would receive no repayment at all, are considered "impaired" and will have the opportunity to vote.
It's unlikely that either plan will be accepted by all impaired classes, Meyer said, so WCI attorneys believe a "cram down" will be required.
A cram down is a bankruptcy term meaning that the plan could be forced upon the creditors by the court, as long as the judge determines that certain legal requirements are met.
Bondholders' attorney Thomas Moers Mayer disagreed, however.
He said the WCI plan can't be confirmed because it fails to meet a major bankruptcy law criteria in that it is not fair and equitable to the creditors, of which the bondholders represent the majority.
Plan details
WCI wants to reorganize, with the help of $35 million in new money from its parent, Renco Group of New York, and continue operating with its management team. Renco Group has agreed, under WCI's plan, to provide financial backing for the steelmaker's pension plan, should WCI be unable to meet the payments.
United Steelworkers of America, which represents WCI's 1,330 hourly employees, has approved a tentative bargaining agreement with the company, pending ratification by union members in voting set for July 15.
The bondholders are offering to invest $50 million in new money in the reorganized company.
Their plan does not include a negotiated agreement with USWA. They plan to offer employment to salaried workers, and to union workers under terms of a contract they say they reached with USWA in March, although it was not signed by the union.
The bondholders would establish a new pension plan, along with the union contract, but they argue that Renco is liable for the pension liability already accrued under WCI.
vinarsky@vindy.com