Weirton Steel sale to go ahead as planned after judge rejects delay request

New York, April 6 - Weirton Steel Corp.'s auction to sell its assets will proceed as scheduled after the judge in its Chapter 11 case rejected a request from senior secured noteholders for a delay to give them more time to prepare a competing bid.

In an April 5 order, the request from the informal committee of holders of Weirton's senior secured notes was denied. The judge also denied a request for the production of documents that the committee claimed had been improperly withheld by Weirton Steel and its stalking horse bidder, International Steel Group Inc.

The committee represents holders of Weirton Steel's $118 million of 10% senior secured notes and $27.35 million of senior secured pollution control revenue refunding bonds due 2012.

In its request for a delay dated April 2, the holders had asked for more time to prepare their bid for Weirton's assets and a stand-alone plan of reorganization. The holders had previously announced that they had hired International Steel Associates Inc. and its principal John Correnti, former chief executive officer of Nucor Steel and chief executive officer of Birmingham Steel, to put together a bid.

They also noted that the original need to hold the auction quickly no longer applied. Weirton Steel had told the U.S. Bankruptcy Court for the Northern District of West Virginia it needed to move fast because its liquidity was dwindling.

But the noteholders said the main cause of the liquidity problem, a shortage of coke from United States Steel Corp., has now been resolved with U.S. Steel currently shipping close to its contracted quantity.

Weirton Steel's operations are now generating cash, the noteholders added in their motion.

Furthermore, the stalking horse offer is at fire sale levels but the five weeks allowed between the bidding procedures order and the actual auction is too short, the noteholders argued.

Under the court-approved sale procedures, bids for the Weirton, W.Va., steelmaker's assets are due by April 6. The auction will be conducted on April 12 in Pittsburgh if a qualifying bid is received. Qualifying bids start at $261.24 million.

The stalking horse bidder for Weirton is International Steel Group, which is offering a total of $255 million for the company's assets. International Steel has already acquired the assets of three other bankrupt steel companies. It went public last year.

There is a $4.74 million break-up fee plus up to $500,000 to reimburse International Steel's expenses.

A hearing on the results will be held April 14.

Weirton's Chapter 11 case number is 03-01802. It filed for bankruptcy on May 19, 2003.

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