Parent Co of WCI Steel to Take on Pension Plan

March 16, 2006 ( - WCI Steel has agreed to give noteholders a majority stake and pay as much as $25 million to preserve its pension plan under a plan that would end its three-year-old bankruptcy case.

Bloomberg reports that the plan calls for note holders to invest $50 million in WCI, and the company would issue $100 million in 8% notes and nine million shares.   Unsecured creditors would get $0.20 cents to $0.22 cents on the dollar for their claims.

The agreement would resolve a battle over WCI’s pension fund between the Pension Benefit Guaranty Corporation (PBGC) and WCI’s controlling shareholder, the Renco Group.   The agreement calls for WCI to put $15 million to $25 million into the pension fund, and for the Renco Group to pay other costs after reorganization, according to Bloomberg.

The note holders’ previous reorganization proposal had called for the pension fund to be abandoned and left for the pension insurance agency, according to Bloomberg.

Last month the PBGC said Renco had enough cash to cover the WCI plan’s liabilities and it was prepared to lay claim to the assets of Ira Rennart, owner of Renco, including his 29 bedroom, $185 million, oceanfront estate in the Hamptons, outside New York City (See  PBGC Fights to Avoid Taking Steel Company Plan).

The United Steel Workers union and the Renco Group are backing the new reorganization plan.   The bankruptcy court judge is expected to rule on the plan March 28.