Legal wrangling in bankruptcy case to end soon

Younger workers wonder how a labor deal would change their jobs.

By DON SHILLING

VINDICATOR BUSINESS EDITOR

AKRON — Workers at WCI Steel finally will get their say in the future of the steelmaker.

Legal wrangling in the company's 30-month bankruptcy case is expected to end this week with a federal judge approving a reorganization plan that calls for the creation of a new company with publicly traded stock. Judge Marilyn Shea-Stonum will take time to review the plan, but Tuesday she called it "good and fair."

"[The case] is coming to a very good end — a new beginning really. It's a good beginning for WCI," she said.

The plan, however, can't become effective without union workers' approving a new labor contract that's been reached between WCI's noteholders and the United Steelworkers of America. No date has been set for a vote.

Uncertainty

Mike Rubicz, president of Steelworkers Local 1375, declined to predict whether the deal would pass.

"There's a lot of uncertainty in the mill," he said.

Workers aren't sure what to think because they have received little information about their pensions and proposed work rules, he said.

Those most concerned are the younger workers, who have been hired since WCI Steel was created out of an LTV Steel bankruptcy case in 1988, he said.

These workers are concerned about the future of the mill and how their jobs will be changed, he said.

The proposed work rules would reduce job classifications, leaving workers with more job duties. The contract also includes $50,000 buyouts for up to 250 workers, so the hourly work force can be cut to about 1,000.

The younger workers also wonder whether the noteholders plan to hold onto the stock they will acquire in the new WCI or if they will sell it to other investors, Rubicz said.

What's in plan

The reorganization plan would give the noteholders, who are owed $260 million by WCI, nearly all of the company's stock. Ira Rennert, a wealthy New York investor, controlled the steelmaker until the bankruptcy filing.

Older workers are more excited about the proposed contract, Rubicz said. Some of them have been waiting for the bankruptcy case to end before they retire, so they will be happy to take the buyout, he said.

Others are hoping they will be able to "double-dip." or retire and receive a pension from WCI's current pension plan while working for the new company, he said.

The plan calls for Rennert to pay for the current pension plan with a subsidy from the noteholders, with the new company having its own pension plan.

Rubicz said union officials will need several weeks to compile all of this information and distribute it to the workers.

Thomas Gentile, WCI chief financial officer, said executives are looking forward to putting the bankruptcy case behind them so they can focus only on making steel. The noteholders are keeping the company's senior management in place, with oversight of a new seven-member board of directors.

The creation of the company's stock will come sometime later, Gentile said.

The handling of creditors' claims against WCI is to continue, though the judge said she wanted those matters resolved by the end of the year. Chris Meyer, a WCI lawyer, said there are disputes with between one dozen to two dozen of the hundreds of claims that have been filed.

The reorganization plan calls for creditors to receive between 20 cents and 22 cents on the dollar for their claims, or a total of $8 million to $10 million.

shilling@vindy.com