WCI secured noteholders file competing plan of reorganization

By Caroline Salls

Pittsburgh, Aug. 19 - WCI Steel, Inc.'s holders of its 10% senior secured notes due 2004 filed their second amended plan of reorganization Friday with the U.S. Bankruptcy Court for the Northern District of Ohio.

The noteholders said their plan pays trade creditors, including unsecured creditors with more than $5,000 in claims, more than the plan filed earlier in the week by the company.

Under the noteholders' plan, trade creditors, including secured noteholders who are holders of unsecured claims, will have the option of recovering $10 million in cash or common stock in the reorganized company.

According to the disclosure statement, holders of about $18 million in trade claims will receive recovery of more than 50%, an increase of more than 20% over the noteholders' original plan.

WCI's plan offers these creditors 22% recovery, the statement said.

Also, the noteholders' plan gives no distribution to WCI's parent and equity holder, Renco Group, Inc.

Under WCI's plan, the reorganized company will issue to Renco 80.1% of its new common interests in return for $40 million in cash and new subordinated notes in return for $15 million in cash over five years.

Treatment of creditors under the noteholders' plan includes:

*Holders of $324.5 million in secured noteholders claims will receive $100 million in new 10-year 9½% notes to be issued by the reorganized company, 4 million shares of common stock in the reorganized company and the rights to buy $50 million of preferred stock in the reorganized company;

*Unsecured creditors with claims of more than $5,000 will receive either $10 million in cash or their share of new common stock reallocated by the bankruptcy court from secured noteholders and proceeds of actions against Renco Group, Inc.;

*Holders of Congress debtor-in-possession loan claims and small noteholder claims will receive 100% distribution in cash;

*Holders of old equity interests will receive no distribution.

A hearing on confirmation of the plan is scheduled for Nov. 14.

On Dec. 16, 2004, the bankruptcy court denied the first plans of both the noteholders and the company, saying the company's plan undervalued the company, leaving creditors with a weaker value than possible. The noteholders' plan was denied because it did not include a labor agreement and because it forced Renco to pay WCI's pension, which left retirees uncertain about their pension benefits.

In their second plan, the noteholders said they addressed the court's concerns by assuming and continuing the company's collective bargaining agreement, as well as the pension plan and all retiree medical benefit plans.

According to the noteholders' disclosure statement, the plan proposes pre-funding up to $50 million into the pension plan so that it will be fully funded.

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

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