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Wheeling-Pittsburgh Steel's Loan Guarantee Application is Approved

Wheeling, WV— Wheeling-Pittsburgh Steel Corporation announced that its revised $250 million loan guarantee application has been approved by the Emergency Steel Loan Guarantee Board. The announcement came less than a month after the company's original application was rejected. The revised application included substantial additional contributions from company creditors, suppliers, and the states of West Virginia and Ohio.

The guaranteed $250 million loan will be used to finance Wheeling-Pittsburgh Steel's emergence from bankruptcy protection. It will also fund the company's strategic plan, which calls for investments in state-of-the-art technology that will improve its manufacturing efficiency.

A major component of the company's plan of reorganization remains the installation of a $110 million electric arc furnace (EAF). The EAF would replace one of the company's two operating blast furnaces. An EAF typically uses recycled scrap steel and scrap alternatives as 100 percent of its feedstock. Wheeling-Pittsburgh Steel, however, will have the capability to feed both scrap and liquid iron from its remaining blast furnace into its EAF.

"The Byrd Bill loan guarantee is the foundation on which Wheeling-Pittsburgh Steel will build its future," Bradley said. "I have confidence that our new manufacturing configuration, when combined with the determination and skill of our employees, will keep steel manufacturing in the Upper Ohio Valley for years to come.

"Wheeling-Pittsburgh Steel has been through tough times since it filed for bankruptcy protection in November 2000. Our employees, though, have been tougher. I am gratified by how much we have been able to accomplish when we closed ranks and worked together to ensure the survival of this great company," Bradley said. "We will work to keep that spirit alive as we transform this company into a competitive steel manufacturing and metal products company."

The Emergency Steel Loan Guarantee Program provides a minimum 85 percent federal loan guarantee for the lender. In addition to the federal loan guarantee, the states of Ohio and West Virginia have agreed to provide financing of $12 million and $15 million, respectively, as part of the loan package. Suppliers have agreed to finance up to an additional $8 million of the non-guaranteed portion of the loan.

Royal Bank of Canada ("RBC") originally filed the application on behalf of the company in September 2002. RBC Capital Markets, the corporate investment banking arm of RBC, will structure and arrange the loan, with RBC Dain Rauscher acting as advisor to the company in connection with its restructuring.

 

 

 

 


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