WHX to give Wheeling-Pitt $33 million
The deal, approved by U.S. Bankruptcy Court, will immediately provide Wheeling-Pittsburgh Steel with $17 million to settle certain inter-company debts with WHX. The steelmaker also gets another $3 million from the sale of its partial ownership of Windsor Coal properties to American Electric Power of Columbus, Ohio.
WHX has also agreed to spend $15 million to buy certain assets of Pittsburgh-Canfield Corp., an Ohio-based Wheeling-Pittsburgh subsidiary that produces electrogalvanized steel used in the appliance and construction markets.
If the transaction is completed as expected late next month, about $13 million of the sale proceeds will be available to Wheeling-Pittsburgh Steel.
The remaining $2 million will be repaid to Citibank as partial payment for the $290 million loan it approved last fall to enable Wheeling-Pittsburgh Steel to operate while it reorganizes under bankruptcy law.
'This settlement is welcome news. ... The agreement will provide substantial funding benefits going forward, and allows us to sustain our operations until our reorganization is completed,' said President James G. Bradley yesterday in a statement.
Surging steel imports, coupled with high energy costs and weak prices, forced Wheeling-Pittsburgh to seek Chapter 11 bankruptcy protection Nov. 16. Wheeling-Pittsburgh is the ninth-largest domestic steel producer and one of 16 steel companies in the United States currently operating in bankruptcy.
'The business climate has improved, albeit very modestly, but we're not expecting huge market improvements,' said James A. Kosowski, Wheeling-Pitt spokesman. The company employs about 4,300 workers at plants in Pennsylvania, Ohio and West Virginia.
Kosowski declined comment on a timetable for Wheeling-Pitt's re-emergence from bankruptcy protection. The last time the company filed for bankruptcy, in the 1980s, it took about five years to reorganize.
Kosowski said anywhere from 300 to 500 steelworkers remain laid off, an improvement from the 1,500 who were laid off in January and February. 'It changes from week to week, depending upon orders from our mills,' Kosowski said.
In addition, the deal approved by U.S. Bankruptcy Court in Youngstown, Ohio, Friday allows WHX to manage Wheeling-Pittsburgh Steel's pension fund until Dec. 31, 2002, at no charge.
About 10,000 retired steelworkers are covered under the plan. Wheeling-Pitt is making pension payments now, and the pact assures those payments will continue.