New credit line to help WCI future

The new walking beam
furnace in the hot strip mill is operational.

WARREN — WCI Steel has reworked its $150 million line of credit, a move that will help rebuild the company’s working capital and give it more financial flexibility.

WCI’s borrowing power had been curtailed under the old agreement, because it hinged on the amount of inventory and receivables, both of which were lowered by a fire in November at the blast furnace hydraulic control rooms.

The new borrowing deal is with Harbinger Capital Partners Master Fund 1, who bought out the bank group that held the $150 million credit agreement, said Leonard M. Anthony, WCI Steel president and chief executive officer, on Thursday.

“We are also pleased to report that the new walking beam furnace in the hot strip mill is operational. Although we still have challenges ahead of us, I am confident that with our customers, suppliers and employees, we can successfully implement solutions to the challenges facing WCI Steel,” Anthony said.

“With the assistance provided by the amended financing, we will be able ensure a brighter future for WCI Steel,” he said.

With the credit amendment, certain advance limitations under the agreement will be waived until July 31, 2008, which will enable WCI to use all of the $150 million at an interest rate of LIBOR plus 5 percent. LIBOR is a common business benchmark interest rate index.

There are certain penalties and stock options for Harbinger if the loan is not repaid on time, WCI said.