October
2003
WCI Steel to Continue Normal Operation After Filing Chapter 11 Petition
for Restructuring
Warren, OH— WCI Steel, Inc. filed a voluntary petition
for protection under Chapter 11 of the U.S. Bankruptcy Code in the United
States Bankruptcy Court for the Northern District of Ohio, Eastern Division,
in Youngstown.
Edward R. Caine, president and chief executive officer
of WCI, said, “Although we very much had hoped to accomplish the
restructuring of the company outside of bankruptcy, industry conditions
and our cash position forced us to take this step in order to protect
the future of the company. The restructuring will continue under court
protection, and WCI will maintain normal operations during the process.”
Caine continued, “We intend to fulfill our commitments
to our employees, retirees and customers without interruption while we
reorganize under court protection. We remain committed to providing our
customers with high-quality products delivered on time and supported by
superior customer and technical service. We deeply appreciate our customers’
loyalty, and I assure them that meeting their needs remains our highest
priority.”
WCI is seeking immediate bankruptcy court approval of
$110 million in debtor-in-possession credit facilities consisting of a
$100 million secured DIP financing from Congress Financial Corporation,
Bank of America, N.A., and other lenders under its existing $100 million
working capital facility (which includes a $15 million junior participation
by The Renco Group, Inc., WCI’s ultimate parent) and an additional
$10 million subordinated secured DIP facility to be provided by Renco.
These facilities are expected to provide the liquidity necessary to enable
WCI to meet its obligations to its suppliers, customers and employees
during the restructuring process and to emerge from Chapter 11 reorganization
proceedings with its desired competitive financial and operating structure.
Caine said the company would continue to pursue the
previously announced strategic restructuring plan within the Chapter 11
process. The key elements of the plan are:
—Restructuring the company’s work systems.
The new structure would create self-directed work teams that are expected
to dramatically improve productivity through a reduction in employment
levels and by providing more autonomy to the workforce. Plans for such
work teams have been the subject of positive discussions between WCI and
the United Steelworkers of America.
—Reducing the debt burden. A new capital structure
is needed that reduces the burden associated with the company’s
long-term debt. Discussions have been under way since July with bondholders
to improve the debt structure. These discussions will continue within
the Chapter 11 processes. The company has retained Jefferies and Company
as its financial advisor in this regard.
—Obtaining a capital infusion. As part of its endorsement
of the strategic plan, Renco has indicated that it is receptive to making
a substantial capital infusion to WCI.
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