Wheeling May File for Chapter 11, Union Says

Wheeling-Pittsburgh Steel was poised on the edge of bankruptcy Monday, according to United Steelworkers officials who waited for word on the company’s negotiations with 24 lenders owed about $500 million.

The company’s board of directors was in session Monday in Pittsburgh but made no statement.

“We are hoping the lenders will see the light and come to an agreement that will make Wheeling-Pittsburgh Steel a viable corporation,” said Paul Rusen, director of United Steelworkers District 23 and chief negotiator in the union’s effort to save about 10,000 jobs with the floundering company.

“We are gravely concerned that the potential of a bankruptcy exists this very day,” Rusen said as his negotiating committee waited in a Pittsburgh hotel room for reports from the company.

David Supino, the union’s adviser from the New York investment banking firm Lazard Freres & Co., declined comment on what, if anything, the lenders have agreed to concede to keep the company afloat.

Union Concessions

Union members have already granted contract concessions worth more than $100 million and are willing to accept wage reductions worth $126 million over the next two years, Rusen said.

Earlier Monday, the union reported that, after sessions in New York on Friday and Sunday, the company’s talks had broken off with 13 insurance companies and 11 banks. But by mid-afternoon, Rusen emerged from his committee meeting and said that “discussions are still taking place between Wheeling-Pittsburgh and their major lenders.”

A recent wave of cheap imported steel and depressed prices worldwide have sapped Wheeling-Pittsburgh’s ability to pay loans it took to modernize its nine plants in West Virginia, Pennsylvania and Ohio.

Union leaders also expressed concern that company Chairman Dennis J. Carney may have changed his mind and may now being considering mortgaging inventory, work in progress and other current assets to raise capital.

‘Sole Security’

That course was among the proposals being discussed by the company and the lenders, Rusen said.

“He is going to need those current assets . . . if there is a recession or other unforeseen circumstance,” Supino said. “It is his sole security. If he gives them away now, the next little wave swamps the boat.

“We cannot be party to that situation. We may as well take our lumps now,” he said.

Analysts said a filing under Chapter 11 of the U.S. Bankruptcy Code would not necessarily mean the end of work at Wheeling-Pittsburgh. The company could continue to operate while the court protects it from its creditors.

“The wonderful track record of Dennis Carney regarding his success in keeping his company operating as long as he has suggests to me that the interlude of court protection may be very constructive here,” said John C. Tumazos, a steel analyst for Oppenheimer & Co.

He cited the December, 1981, Chapter 11 filing of McLouth Steel of Detroit, which continued operating until selling the steel operations to Tang Industries in November, 1982. Tang continues to operate the company although at reduced levels.