WHEELING-PITTSBURGH STEEL Holding company to buy Pitt-Canfield Corp.
THE VINDICATOR, YOUNGSTOWN
YOUNGSTOWN -- WHX Corp. will give Wheeling-Pittsburgh Steel Corp. an immediate cash infusion of about $20 million and another $13 million this summer, buying the steelmaker more time to reorganize under bankruptcy law.
The deal would let WHX give Wheeling-Pitt $17 million to settle old accounts, company officials said Tuesday. The West Virginia-based steelmaker also would get $3 million from the sale of its partial ownership of Windsor Coal properties to American Electric Power in Columbus.
WHX Corp. is a holding company that controls, and invests in, a diverse group of businesses, including Wheeling-Pitt.
Under the plan, approved Friday in U.S. District Bankruptcy Court here, WHX has agreed to buy Pittsburgh-Canfield Corp., a Wheeling-Pitt subsidiary in Canfield which produces electrogalvanized steel for appliance manufacturing and construction. The sale is set for completion in late June, provided no higher or better offers are forthcoming.
That $15 million purchase will generate $13 million for Wheeling-Pitt. The other $2 million will go to Citibank N.A. as partial payment for the $290 million loan it approved last fall so Wheeling-Pitt could operate while it reorganizes.
"This helps a lot," Wheeling-Pitt spokesman Jim Kosowski said. "We expect this to be able to sustain us through the reorganization."
Kosowski said the sale of the Pittsburgh-Canfield plant is a sign that WHX considers it viable. He said the sale is not expected to change operations for the plant's 50 employees.
Bankruptcy: Facing a $15 million bond payment it couldn't make, Wheeling-Pitt sought Chapter 11 bankruptcy protection Nov. 16.
The last time the company filed for bankruptcy -- in the 1980s -- it took about five years to emerge. It shouldn't take as long this time, Kosowski said.
"Then, there were contract issues and supplier issues. Things that were issues that time are not issues now," he said. "It's just been the market."
Wheeling-Pitt has struggled with surging imports, high energy costs and weak prices for its products.
Kosowski would not offer a timeline for reorganizing, but he said the bankruptcy and the recovery plan will be driven largely by the future performance of the market.
Pension fund: The deal approved by U.S. Bankruptcy Court also allows WHX to manage Wheeling-Pitt's pension fund until Dec. 31, 2002, at no charge.
"If contributions are necessary for whatever reason ... WHX wouldn't charge Wheeling-Pitt for those," Kosowski said.
Wheeling-Pitt is making pension payments now, he said. The pact assures those payments will continue to be made and employees' pensions are safe, he said.
Wheeling-Pitt, the nation's ninth-largest integrated steel maker, has some 4,300 workers at plants in West Virginia, Ohio and Pennsylvania.
Its work force has been cut nearly 15 percent since the bankruptcy filing, with about 1,500 workers temporarily laid off.
Company president James G. Bradley said the company and the United Steelworkers of America have worked together to contain costs since last fall.
That, combined with an improving seasonal demand for Wheeling Corrugating Co. products, will help the company recover, he said.