Noteholders Take Control of WCI Steel, Inc.

Almost three years after WCI Steel, Inc. announced that it would default on $300,000,000 in senior secured notes, and after two and a half years in hotly contested Chapter 11 proceedings, 17 Noteholders led by Harbinger Capital Partners Master Fund I, Ltd. on May 1 consummated a plan of reorganization that gave the Noteholders $100,000,000 in new 8% Secured Notes and more than 98% of the equity of the reorganized steel company.

WCI Steel exits Chapter 11 with a new collective bargaining agreement with the United Steelworkers. Pat Tatom continues as chief executive officer. Harbinger will be the largest shareholder in the reorganized company.

WCI Steel, Inc., a 1,200,000 ton per year niche oriented integrated producer of value-added custom steel products, had been owned for 17 years by Renco Group, Inc., the holding company of financier Ira Leon Rennert.

Mr. Rennert, who had saved WCI Steel, Inc. from closing when he bought it out of the first LTV Steel Chapter 11 case, fought for more than two years to keep WCI Steel. In 2004 and 2005 he proposed plans that would have paid Noteholders approximately 40 and then 50 cents on the dollar. Bids for the secured notes prior to closing reached approximately 100 cents on the dollar. Most unsecured trade creditors with undisputed claims will receive 22 cents on the dollar in cash on May 31, 2006.

Mr. Rennert lost control of the Chapter 11 case in November 2005, when the United Steelworkers reached an agreement in principle with the Noteholders on a new collective bargaining agreement. This was an historic achievement. The USW had never before negotiated a collective bargaining agreement with creditors over the opposition of management and ownership. The Noteholders’ agreement with the USW provided security for the USW’s hardship benefits. The USW’s membership ratified the new collective bargaining agreement on April 27, 2006.

The Noteholders were represented by Kramer Levin Naftalis & Frankel LLP as lead bankruptcy counsel and CIBC World Markets as financial advisor. McDermott Will & Emery LLP, the Noteholders’ labor counsel, negotiated the historic agreement with the USW and will continue as corporate counsel to the reorganized WCI Steel, Inc.

The primary bankruptcy trial team was comprised of  Thomas Moers Mayer, Tom Moreland, Greg Horowitz, Gordon Z. Novod, Amanda Segal and Emily Seidman. The closing team was primarily comprised of Ken Chin, Tom Balliett, Kristen Campana, Mae Rogers, Susan Kim and Marissa Leung.  In addition, the following other Kramer Levin attorneys played significant roles throughout the case: Christine Lutgens, Jeff Trachtman, Barry Herzog, Abbe Dienstag and Peter Kolevzon.