U.S. BANKRUPTCY COURT WCI, bondholders continue to battle for ownership
Despite compromise efforts, the competing buyers remain far apart.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
AKRON -- After eight hours of sparring in the courtroom and negotiating behind closed doors, WCI Steel and the bondholders vying to buy the company have agreed to postpone their final battle until sometime next month.
Confirmation hearings began Wednesday in United States Bankruptcy Court here to determine which of the two competing bidders should have the right to take ownership as the Warren steel mill emerges from Chapter 11 bankruptcy protection.
Judge Marilyn Shea-Stonum had set aside most of today and a half-day Friday to continue the hearings. Attorneys representing the two sides said that wasn't enough time, however, to present all the testimony and discuss all the disputed issues.
A new hearing date will be scheduled, probably in mid-August.
Ed Caine, WCI's chief restructuring officer and former president, said he had hoped the company could restructure and emerge from bankruptcy earlier, but the expected delay of four weeks "shouldn't be a significant problem."
Judge Shea-Stonum has been urging WCI and the bondholders to hammer out a compromise plan for the company ever since she took over its Chapter 11 case from retired Youngstown bankruptcy Judge William Bodoh in January.
But attorneys said the two sides remain far apart, and it appears Judge Shea-Stonum will have to decide between them when the confirmation hearings resume.
"We want to own this company unless someone wants to pay us for it," said Thomas Moers-Mayer, an attorney representing the creditor group which holds $324 million in WCI bonds secured by its plant, property and equipment.
They would get $94 million in new notes under WCI's restructuring plan -- less than one-third of what they believe they are owed.
The company sweetened the pot further Wednesday with an amended plan that would pay the bondholders an additional $18 million over five years starting in 2006, provided WCI's earnings remain strong.
WCI's parent company, Renco Group of New York, also has agreed to pump another $15 million into the mill starting in 2006 on top of the $35 million it already has pledged under the new plan.
Moers-Mayer called WCI's latest offer ridiculous, arguing it repays only a fraction of the bondholders' investment, and even that money won't come for several years if at all.
The bondholders rejected the proposal, but the company filed the expanded offer anyway.
G. Christopher Meyer, an attorney for WCI, called the amended plan "an honest effort at improvement, but not enough, in the bondholders' view."
"This company is very valuable and it's making money hand over fist," Moers-Mayer said, pointing to financial reports showing WCI earned $3.2 million in June, its fifth consecutive profitable month. He added the fight is over how much the Renco Group's owner "is willing to pay us for it."
WCI's method of determining a value for its plant and property has emerged as one of the main sticking points Judge Shea-Stonum has asked the two sides to focus on in the confirmation hearings, along with pension issues.
Members of United Steelworkers of America Local 1375, which represents about 1,330 hourly workers at WCI, have ratified a new, four-year labor agreement with WCI which will take effect immediately if the company's plan prevails. The bondholders do not have a negotiated agreement with the union.