WCI Steel noteholders appeal denial of confirmation of plan

By Caroline Salls

Pittsburgh, April 29 - WCI Steel, Inc.'s secured noteholders appealed the order denying confirmation of and lifting a moratorium on WCI's competing plans of reorganization, according to a Thursday filing with the U.S. Bankruptcy Court for the Northern District of Ohio.

WCI Steel's competing plans of reorganization filed by WCI and the noteholders were both denied confirmation April 13.

In that order, the court said the company's own plan cannot be confirmed because of "the overly conservative reckoning of enterprise value of the reorganized debtor and aggressive characterization of the new value being provided by existing equity; [and] the debtors' undervaluation of the secured noteholders' collateral, i.e., plan, property and equipment."

The court said the noteholders' plan is not feasible and therefore cannot be confirmed.

The court also said WCI's plan violates law because Renco Group Inc. is retaining 100% of the new equity while failing to contribute new value that is worth the reasonably equivalent value of the equity.

Also, the company's plan is not confirmable because its distribution of $94 million of new 9% 10-year notes does not comply with requirements, the April 13 order said.

On Dec. 15, the court entered an opinion allowing time for the two sides to come up with a consensual plan without the distraction of appeals or filing of amended plans.

However, after two status conferences, it was apparent that the two sides were not going to reach a consensual plan.

Therefore, on April 1, Arthur Newman of The Blackstone Group was appointed a testifying valuation expert and the moratorium to allow the two sides to come up with a consensual plan was lifted.

Renco also appealed the plan denial on April 22.

WCI, a Warren, Ohio-based steel company, filed for Chapter 11 on Sept. 16, 2003. Its case number is 03-44662.

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