Court to hear plan dispute

WCI officials pitched the company to more than 130 potential buyers.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- WCI Steel is expecting plenty of support in federal bankruptcy court today in its fight for the exclusive right to submit a reorganization plan and emerge from bankruptcy protection as an operating company.
A group of creditors that together hold $324 million of the Warren steelmaker's secured notes is asking the court for permission to submit its own plan for buying WCI's assets and operating the company.
For that to happen, bankruptcy Judge Marilyn Shea-Stonum would have to waive WCI's right, through May 14, to be the only one submitting a plan. A hearing on the question was set this morning in Akron.
Arguments for WCI plan
WCI's parent company, Renco Group, and its official committee of unsecured creditors, which includes the United Steelworkers of America, have filed motions opposing the note-holders' plan.
The unsecured-creditor committee also includes: United States Steel Corp., which supplies coke for steel production; FirstEnergy Corp., which supplies its electric power; Cleveland Cliffs Inc., which provides iron ore pellets; Oglebay Norton Marine Service Co., a shipping company; and Carmeuse North America, a lime and limestone supplier.
Their motion argues that the company's reorganization plan is in its best interest for a number of reasons, including WCI's agreement to increase some of its payments to creditors.
Most importantly, they say, the company has reached a tentative contract with USWA, which represents about 1,400 hourly workers at WCI, and has a financing commitment that eliminates risk. The contract won't be final until ratified by union members, represented by USWA Local 1375.
"Currently, the note-holders' plan has a high degree of execution risk," the union's motion states. Details of the note-holders' proposal have not been released.
USWA said it met separately over several months with the note-holders and with WCI and determined that the company's plan best addresses the interests of WCI employees and retirees.
Under WCI's plan, Renco Group would assume the costs of its pension plan and would make commitments to capital spending, the union said.
"The USWA is firmly convinced that this new tentative collective bargaining agreement with the debtors and debtors' proposed plan of reorganization constitute the only basis for a successful reorganization," the union wrote.
Search for buyer
Renco, writing its opposition to the note-holders' plan, said the company conducted an extensive search for a buyer. Working with legal and financial advisers and industry experts, it said, WCI officials put together an informational packet on the company, known as a "pitch-book," and contacted 131 strategic and financial entities to gauge their interest in buying or investing in the company.
The company received three bids for the assets, with the "most substantive" coming from Renco and the note-holders. The marketing effort is continuing, however.
Renco's offer included a pledge to provide $35 million of additional capital to continue operations at WCI. Based in Warren, WCI has 1,750 employees and is the Mahoning Valley's third-largest industrial employer. It filed for Chapter 11 bankruptcy protection in September, and officials want to emerge from that in July.
vinarsky@vindy.com