Judge tells WCI Steel and bondholders to work on settlement

The bondholders argued that WCI didn't try very hard to find a buyer.
& lt;a href=mailto:vinarsky@vindy.com & gt;By CYNTHIA VINARSKY & lt;/a & gt;
VINDICATOR BUSINESS WRITER
AKRON -- WCI Steel and the bondholders who want a chance to buy the company out of bankruptcy are under orders to work out an out-of-court solution to their differences after a lengthy hearing in federal bankruptcy court here Tuesday.
Bankruptcy Judge Marilyn Shea-Stonum asked the two sides to reach a settlement themselves after a hearing that started at 9:30 a.m. and ended after 9 p.m. Tim Roberts, a WCI Steel spokesman, said the judge will schedule another hearing on the matter next Tuesday.
Warren-based WCI has filed a reorganization plan to emerge from Chapter 11 bankruptcy protection. Its parent company, Renco Group of New York, would retain ownership under the plan, funneling in an additional $35 million to keep the mill operating.
The hearing was to determine whether the bondholders, which together hold $324 million of WCI Steel's secured bonds, should have the right to submit a competing bid for the company.
Under bankruptcy law, a company generally has the exclusive right to submit a reorganization plan under a time limit set by the court. In WCI's case, that exclusivity ends May 14.
Renco Group, and its official committee of unsecured creditors, which includes the United Steelworkers of America, have filed motions supporting WCI's plan.
In testimony Tuesday, the bondholders argued that WCI's efforts to market the company have been "grossly deficient."
Points that were made
Stephen Strom, an investment banker with CIBC World Markets who is advising the bondholders in their effort to buy the company, said the two-page "teaser" the company sent out in February to 131 potential buyers failed to describe WCI in a sufficiently favorable light.
The teaser gave prospective buyers about two weeks to contact the company to request more information, and that wasn't not enough time, Strom argued.
And he said WCI's financial adviser, investment banker Jefferies Group Inc., failed to follow up on several prospects who never gave a reason for their disinterest.
International Steel Group, the Cleveland company that bought LTV Steel and a string of other steel mills over the past two years, was one of those that never gave a specific reason for its disinterest, Strom said.
Timothy O'Connor, WCI's adviser at Jefferies Group, responded by saying that the company contacted about three times more prospective buyers than it typically has in Chapter 11 sale efforts.
And O'Connor said WCI has continued to talk to prospective buyers, long after its initial deadline passed, meeting with one prospect as recently as last week.
Ed Caine, WCI's chief restructuring officer, said the company's sale literature was conservative in describing WCI not to discourage buyers but because the steel industry was in a state of uncertainty.
"The steel industry was in such a flux at the time that we couldn't possibly project more than six months ahead," Caine said.
& lt;a href=mailto:vinarsky@vindy.com & gt;vinarsky@vindy.com & lt;/a & gt;