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Posted on Wed, Oct. 08, 2003 Weirton Steel considers selling to larger steelmaker VICKI SMITH Associated Press WEIRTON, W.Va. - Weirton Steel Corp. has acknowledged it's negotiating a possible sale as a way to escape bankruptcy protection. The struggling steelmaker reported in documents filed late Tuesday with the U.S. Bankruptcy Court in Wheeling that it has discussed a sale with International Steel Group Inc. of Cleveland. Tucked into one paragraph among hundreds of pages in the filing is a reference to "the sale process and the status of discussions with ISG," a company built from the remains of other down-and-out steelmakers. Weirton also outlined a reorganization plan that would eliminate 950 jobs - nearly one-third of its work force - and terminate an under funded pension and health care plan that covers 10,000 retirees and their dependents. The company, across the Ohio River from Steubenville, Ohio, employs many Ohioans. ISG was formed last year after New York buyout firm WL Ross & Co. purchased the remnants of Cleveland's bankrupt LTV Corp. Later, it acquired the assets of Bethlehem Steel and Acme Metals. Today it is the nation's second-largest integrated producer and is in the process of going public. ISG Chairman Wilbur Ross, in a telephone interview from London late Tuesday, said his management team toured the Northern Panhandle mill at Weirton's request many weeks ago. "That's really about as far as it's gone," he said. "There are, at present, no talks under way. "It is ISG's practice ... to look at every company that's in difficulty and has put itself up for sale," he said. "That's sort of our standard operating procedure." Acquiring Weirton would help ISG expand its growing empire to include one of the largest tin mill operations in the nation. It also would end a labor legacy at the West Virginia mill, once America's largest wholly employee-owned company. Weirton is still pursuing a plan to remain an independent producer, but success hinges on factors beyond the company's control, including the continuation of tariffs on steel imports and the approval of a federally guaranteed loan package by year's end. Because the Emergency Steel Loan Guarantee program is slated to end Dec. 31, the company had to file its reorganization plan now, while still negotiating the proposed changes with the Independent Steelworkers Union, company spokesman Gregg Warren said. That means the plan will likely be modified before it is presented to the bankruptcy court for a confirmation hearing in early December. "The stand-alone plan is obviously the one we prefer, and that's what we're pushing for," Warren said. "But you do not know how these things will turn out in the next couple months, and the prudent thing to do is to have another plan - and that is to sell the company." Weirton Steel, the nation's fifth-largest integrated producer, sought Chapter 11 bankruptcy protection in May after racking up more than $700 million in losses over five years. The company paid nearly $31 million in retiree benefits in 2002 and expects to pay slightly more than that this year, court documents indicate. As of Dec. 31, 2002, actuarial estimates put Weirton's future cost of retiree benefits at about $356 million. Other steel companies, including Bethlehem and LTV, have used bankruptcy partly to be freed of obligations to retirees. Still, ISU spokesman David Gossett urged workers and retirees alike not to panic, stressing that the reorganization plan was preliminary. The bankruptcy court, meanwhile, has named a committee to represent retiree interests. The company says its obligations to retirees, or so-called "legacy costs," have created a $40 per ton disadvantage compared to other domestic producers. Its new plan envisions the federal Pension Benefit Guaranty Corp. taking over those obligations. As of Monday, PBGC spokesman Jeffrey Speicher said his agency had not moved to do that. Weirton executives have long hoped to keep the company a small, independent mill, banking on a $175 million loan package through the Emergency Steel Loan Guarantee Program. The plan also depends on the continuation of tariffs that President Bush imposed on certain steel imports last year. Those tariffs, which ranged as high as 30 percent, were designed to give struggling U.S. companies time to restructure and become more competitive. But Weirton's latest cost-cutting contract talks with the ISU have been going slowly, with no immediate prospect of agreement. In February, workers took a 5 percent pay cut and made other sacrifices to keep the company afloat. They voted to forgo a planned $1 per hour raise and froze their accrued pension benefits to stop the company's liability from growing any larger. Some workers have been unwilling to give much more. "It's going to be very emotional here," Gossett said. "We don't agree with all the decisions made recently by upper management, but we can't ignore that we are in bankruptcy, and we have to continue to cope with that." ON THE NET Weirton Steel: http://www.weirtonsteel.com ISG:
http://www.intlsteel.com |