STEEL INDUSTRY WCI to allow submission of competing proposals

The competing buyers agree on one thing: WCI is a valuable company.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
AKRON -- WCI Steel has agreed to let its parent company and a group of the steelmaker's secured bondholders duke it out for ownership of the Warren steel mill.
WCI announced in U.S. Bankruptcy Court here Tuesday that it is giving up its exclusive right to submit a plan for reorganizing the company, allowing the bondholders to submit a competing plan. The bondholders are WCI's largest creditor, holding $324 million of its secured notes.
"The one thing in which both parties are united, is that the company is a very valuable enterprise," said Thomas Moers Mayer, an attorney for the bondholders.
Plans
Renco Group of New York, WCI's parent company, has already submitted a plan to buy the steelmaker out of Chapter 11 bankruptcy protection.
Under the plan, Renco agreed to invest an additional $35 million in capital, to assume the costs of WCI's defined benefit pension plan and to establish a new, identical plan for employees.
Renco also negotiated a tentative bargaining agreement with United Steelworkers of America, which represents 1,330 hourly WCI workers. USWA and WCI's unsecured creditors committee have both been supportive of Renco's plan.
But Atty. G. Christopher Meyer, representing WCI, said the company decided to allow bondholders to offer their competing plan to eliminate any doubt or question about the validity of the sales process.
He said WCI and the bondholders remain "light years apart" and predicted continued disagreement between the two sides.
The booming steel market and WCI's strong sales are making it possible for WCI to safely delay confirmation of a reorganization plan, Meyer explained.
Relining
Plans for a crucial relining of WCI's blast furnace can go forward June 4, as planned, he said, because the company now has enough money to support the project. Originally, more outside capital was needed to pay for the $13 million relining.
Ed Caine, WCI's chief restructuring officer and former president, said the delays likely to result with the addition of a second prospective buyer should have "no affect at all" on the blast furnace relining.
He emphasized that the company still needs to restructure its debts and operational costs to continue successfully. "All the good market has done is delayed the point in time where we have to be restructured," Caine said.
The relining process will take about 45 days, and WCI will shut down its operations sequentially as it runs out of raw materials and finished materials, he said.
Looking ahead
WCI has been working with its customers for four months, Caine said, producing inventory for them in advance to avoid any supply shortages while portions of the mill are shut down.
Meyer said the company is also continuing to market itself to other prospective buyers. The bondholders have argued that WCI hasn't tried hard enough to find a buyer.
Judge Marilyn Shea-Stonum met with WCI and bondholder attorneys after the hearing Tuesday to begin working out how the court will handle the two competing plans.
WCI is the Mahoning Valley's third-largest industrial employer with 1,700 workers. The company, which produces custom steel products, filed for Chapter 11 bankruptcy protection last September.
vinarsky@vindy.com