By Vicki Smith
The Associated Press
WEIRTON, W.Va. - Weirton Steel Corp., the nation's sixth-largest integrated steel maker and No. 2 producer of tin, filed for Chapter 11 bankruptcy protection Monday.
The employee-owned company located across the Ohio River from Steubenville, Ohio, held on while an import crisis took down dozens of competitors, but racked up more than $700 million in losses over five years.
Weirton Steel employs 1,100 Ohioans.
President and CEO John Walker said the company has obtained a $225 million financing package that will allow it to keep operating while it reorganizes.
Walker had been in the middle of a plan to cut costs by $120 million when Weirton Steel's board of directors voted Monday to file for bankruptcy.
"In the past year, we did everything we could do outside the bankruptcy venue before taking this necessary step," Walker said. "Our previous initiatives strengthened the company, but it became increasingly evident in the current industry climate that Chapter 11 reorganization is the only remaining solution to address our liability issues."
In its bankruptcy filing, Weirton Steel said it had about $654.5 million in assets and about $1.41 billion in debts as of March 31. The company expects to file a reorganization plan within about six months.
Walker said the recent U.S. Steel-National Steel and International Steel Group-Bethlehem Steel mergers, along with a federal $250 million loan package awarded to Wheeling-Pittsburgh Steel, left his company with no options for expansion.
Weirton's survival strategy had centered on having the nation's largest tin mill. Only U.S. Steel produces more tin-plated steel than Weirton, where tin accounts for 38 percent of production and 50 percent of revenues.
Monday's filing surprised a steel analyst who said Weirton Steel had seemed to "be bumping along."
But the company was squeezed by rising energy and material costs and declining prices for tin products, said Michael Locker, president of Locker Associates Inc. and author of the Steel Industry Update Newsletter.
The Independent Steelworkers Union had helped Walker trim $38 million, approving a one-year contract that cut pay 5 percent, canceled a planned raise and froze accrued pension benefits. The company planned to cut an additional $34 million by asking the 3,600 active employees and 4,600 retirees and dependents for health-care givebacks.
Retirees, however, had been slow to embrace the request, which asked that they help cover the cost of health insurance with a $200 monthly deduction from their pension checks. They also faced higher co-payments for prescription drugs and doctor visits. Weirton Steel is seeking court approval to create a committee of retirees to address the pension issues.
ISU president Mark Glyptis, who sits on the board of directors, opposed the bankruptcy filing.
"Today, our senior management effectively gave up and conceded defeat," he said. "But the working people of Weirton Steel will never surrender. We will not give up."
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