WCI Steel could emerge from chapter 11 bankruptcy proceedings based on the tentative agreement reached between representatives of the secured noteholders of WCI Steel and the United Steelworkers. The tentative agreement addresses a proposed collective bargaining agreement and modifications to the plan of reorganization.

Under the proposed plan as modified, secured noteholders will make a $50 million cash investment in convertible preferred stock of WCI Steel. They will also exchange their $300 million in pre-petition notes for $100 million in new 8% 10-year notes secured by a lien on steelmaking assets subject to the hardship benefits lien and substantially all of the equity in the reorganized company.

In addition to their $50 million cash investment in the reorganized WCI Steel, the secured noteholders have obtained a commitment for a $150 million line of credit from Citigroup Global Markets Inc.

As a result of the tentative agreement, WCI Steel will emerge with $50 million less debt than had been contemplated by the noteholders' proposed plan of reorganization while preserving pension and health care benefits. The tentative agreement further provides for a guarantee of up to $75 million in hardship benefits backed by a lien on steelmaking assets enforceable in the unlikely event of a shutdown.

Confirmation hearings on the current plans pending before the U.S. Bankruptcy Court in Akron were recessed on Thursday to give all parties time to become familiar with the details associated with noteholders' revised reorganization plan.

Patrick G. Tatom, WCI's President and CEO, said WCI's management will carefully review the new terms and will work cooperatively with the USW, creditor groups and other interested parties so a recommendation can be made to WCI's board of directors concerning a revised plan. No timetable was given for the company's review of the plan's revised terms, although Tatom indicated that the review would be conducted as quickly and as prudently as possible. He also stressed that the development will have no effect on WCI operations, customer or suppliers.

Upon consummation of the plan of reorganization, the reorganized WCI Steel will be a publicly held company filing reports under the Securities Exchange Act of 1934. Upon consummation of the plan, the largest shareholder of the reorganized WCI Steel will be Harbert Distressed Investment Master Fund Ltd., which manages approximately $3 billion.

The proposed collective bargaining agreement is subject to ratification by the members of USW Local 1375 and to confirmation of the proposed plan as modified by the U.S. Bankruptcy Court for the Northern District of Ohio. Secured noteholders holding more than 70% of all secured notes have already announced their support for the proposed plan modifications.

WCI is an integrated steelmaker producing more than 185 grades of custom and commodity flat-rolled steel at its Warren, Ohio, facility. WCI's products are used by steel service centers, convertors and the automotive and construction markets. The company has approximately 1,650 employees, over 1,250 of which are represented by the USW. WCI filed a voluntary petition for protection under Chapter 11 of the U.S. Bankruptcy Code on Sept. 16, 2003.