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Wheeling-Pittsburgh to File for Chapter 11

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Associated Press

Wheeling-Pittsburgh Steel Corp., among the nation’s 10 largest steel makers, announced today that it will seek court protection from creditors under federal bankruptcy code.

Wheeling-Pittsburgh said the company’s board of directors voted to seek the financial protection after failing to win concessions from creditors owed $500 million.

It said it can “assure all parties that Wheeling-Pittsburgh will continue to do business and survive” after the filing under Chapter 11 of the bankruptcy act.

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The Pittsburgh-based company, in an unsigned statement handed to reporters before a morning news conference, blamed the United Steelworkers of America union for its financial plight.

“It is inconceivable to management that the USW and their investment banker have forced the Chapter 11 filing by withdrawing their concession offer because they did not agree with the terms of the bank agreement reached between management and the banks,” the company said.

Vice President Joseph Scalise said creditors were willing to defer payments and grant new loans in exchange for a lien against inventories and other assets.

But Scalise said that the union, one of the company’s unsecured creditors, withdrew its offer to further wage concessions because of the lien arrangement.

About a half-hour before the announcement, the New York Stock Exchange announced that the opening of trading in Wheeling-Pittsburgh’s stock had been delayed pending an announcement by the company. There had been reports that the company’s directors voted to approve the filing Monday.

The 10,000 USW members who work at nine Wheeling-Pittsburgh plants in West Virginia, Pennsylvania and Ohio previously conceded more than $100 million in wages and benefits to help keep the company afloat. Amid the latest crisis, their negotiators agreed to an additional $126 million in concessions over the next two years.

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The company made another attempt Monday night to win a further round of significant contract concessions from the union. But in the absence of concessions from its bankers, the company failed to persuade USW negotiators to drop total labor costs below $19.50 per hour, according to a source, who spoke only on condition of anonymity.

Under Chapter 11 of the Federal Bankruptcy Act, a company voluntarily seeks a bankruptcy court’s protection from creditors while the court directs the development of a plan to reorganize its finances to return it to profitability. It is not unusual for a company involved in Chapter 11 proceedings to continue operating while under the court’s protection.

Wheeling-Pittsburgh is believed to be the nation’s seventh- or eighth-largest steelmaker. The company has not filed its financial results for the fourth quarter of 1984.

Losses projected by the company at $54 million for last year would bring its deficits over the last three years to about $170 million on sales of approximately $800 million per year. Results for 1984’s final quarter have not been reported.

A recent wave of cheap imported steel and depressed prices worldwide sapped Wheeling-Pittsburgh’s ability to pay loans it used to modernize its plants.

USW negotiator Paul Rusen had predicted last week that without an agreement with Wheeling-Pittsburgh’s 24 creditors by midnight Sunday, the company would be forced to file under Chapter 11 by today or Wednesday.

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