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Creditors, Owners Split Sharply Over Value of WCI Steel"
WARREN -- Just how much is WCI Steel worth?The federal judge hearing WCI's 19-month-old bankruptcy case wants to bring in a financial expert from New York City to resolve the long-running dispute over that question.Judge Marilyn Shea Stonum wants the company to hire Arthur Newman of The Blackstone Group, a global investment and advisory firm, to study WCI's finances and give an opinion on its value. WCI would pay for his services at a rate the court sets.Newman has served as an adviser in several major bankruptcy cases including LTV Corp., Phar-Mor and Chiquita Brands. A hearing is set for 8:30 a.m. Friday in U.S. Bankruptcy Court, Akron, to give WCI attorneys and others involved a chance to discuss the proposal.The value of WCI has been a major sticking point between owners and creditors, causing the company's bankruptcy to drag on. WCI sought Chapter 11 protection in September 2003, officials saying then they hoped to emerge as a reorganized entity no later than last July.WCI and its multimillionaire owner, Ira Rennert, contend the mill is worth between $100 million and $110 million.A bondholder group vying for ownership of the company disagrees, arguing the company is worth somewhere between $285 million and $350 million. The lending group holds $324 million in WCI bonds secured by its plant, property and equipment, so its members have the most to lose if the judge agrees with the lower valuation.Both sides brought in experts to justify the rationales behind their widely different valuations.Shea Stonum had asked the two sides to negotiate a compromise plan for restructuring the company, but attorneys told her in mid February that they could not. Friday's hearing is the first court session scheduled since then.The judge is likely planning to use valuation services The Blackstone Group provide to help her decide between the two competing ownership groups' plans. She also has the authority to order the two sides to work again on a compromise or to start the confirmation process over.In a related matter Friday, Judge Kay Woods of the U.S. Bankruptcy Court in Youngstown will hear testimony on WCI's motion to grant 3% pay increases to all its hourly and salaried employees. That hearing will also be held in Akron.Shea Stonum is hearing WCI's confirmation issues while Woods is handling all other matters.WCI wants to grant pay raises as a way to improve morale for the company's 1,650 workers, spokesman Tim Roberts said. Many are discouraged by the lengthy bankruptcy proceedings and the uncertainty the delays have created.Employees represented by Local 1375 of the United Steelworkers of America could expect pay raises and retirement incentives if the WCI-Rennert group prevails.The local ratified a 4-year contract last summer but it won't take effect unless Rennert continues as owner of the mill.The contract would allow WCI to combine some job classifications and create other efficiencies projected to save WCI millions of dollars in operating costs over the life of the agreement."