Weirton Steel gets another objection to proposed bidding procedures

By Jeff Pines

Washington, March 5 - Weirton Steel Corp. received another objection to its proposed bidding procedures, this time from Frontier Insurance Co.

Like the senior secured noteholders, who previously objected, Frontier believes the break-up fee is too high at $6.875 million and will turn other bidders away.

Frontier referred to the asset purchase agreement as "highly complex with unique conditions" coupled with "unduly burdensome procedures," in its filing with the U.S. Bankruptcy Court for the Northern District of West Virginia.

Among other issues raised by Frontier are that the auction schedule does not allow potential bidders sufficient time to review the assets, that bidders must deposit $7.875 million, that bidders must raise their bids in increments of $2 million and that they must have no financing contingencies.

"These constraints add nothing to the process other than to discourage any third parties," Frontier said.

Frontier is providing a surety bond posted by the company with West Virginia's Bureau of Employment Programs, Workers' Compensation Division.

Weirton proposes to sell its assets to International Steel Group for a total of $255 million including liabilities, unless the company gets a better offer in the auction.

The hearing to approve the bidding procedures is on March 8. If approved, the deadline for submitting bids would be April 6.

On March 4, the company's informal committee of senior secured noteholders filed a similar objection to the procedures.

The Weirton, W.Va. company filed a voluntary petition for bankruptcy on May 19, 2003 after being suffering from a world-wide coke shortage and labor problem. Its Chapter 11 case number is 03-01802.

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