May 21 2003
In the continuing saga of consolidation and restructuring of the US steel industry Weirton Steel today filed for voluntary reorganisation under Chapter 11 of the US Bankruptcy code. They will become the 36th US steel producer to do so in the last 5 years.
The reorganisation was deemed a necessary step before they could return to profitability and invest in facilities to pursue strategic growth. To this end, they will look to cut costs and to become more competitive.
Three main areas will be addressed during the restructure:
- Filing for bankruptcy will allow Weirton to address legacy costs such as pension funds, retiree healthcare benefits and life insurance and other burdensome contracts, which could not otherwise be dealt with.
- Improvement of liquidity while remaining in operation and access to financial facilities only available after filing for bankruptcy
- Reorganisation will also allow them to reduce pension liabilities that have been brought about by the stock market downturn and eroded pension assets.
These developments follow on from an extensive restructure that took place during 2002, which resulted in cost savings, improved efficiency, reduced employment costs as well as addressing expenses and long term debt.
Weirton Steel intend to operate as normal during the Chapter 11 reorganisation, with no disruptions to production or customers envisaged.
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