Weirton Steel reaches agreement with noteholders on enhanced exchange

New York, Feb. 25 - Weirton Steel Corp. said it reached agreement with an informal committee of noteholders on an enhanced exchange offer.

Under the amended offer, investors will now receive for their notes up to $550 in principal amount of new 10% senior secured notes due 2008 and $450 in liquidation preference of new series C convertible redeemable preferred stock, for a total of $134.2 million and $109.8 million respectively of the new securities. The exchange covers Weirton's existing 11 3/8% senior notes due 2004 and 10¾% senior notes due 2005 with a total of $244 million outstanding.

The previous exchange, detailed in a registration statement filed by the company on Nov. 1, 2001, would have given noteholders $85.4 million principal amount of new 10% senior secured discount notes due 2008 in exchange for their current holdings.

The informal committee represents holders of a majority of the outstanding notes, according to the Weirton, W.Va. steel company. It said it will now begin an exchange offer and consent solicitation to restructure the notes.

Weirton steel described the exchange as part of its "five step strategic plan to provide the company with greater overall financial stability and permit the fundamental repositioning of its business through strategic acquisitions and targeted investments."

The new senior secured notes will be secured by a second priority lien on the company's hot strip mill, No. 9 tin tandem mill and tin mill assets, which are integral facilities in its downstream processing operations. Interest on the new senior secured notes will be limited in the first three years and be payable in cash after that at 10%.

The series C preferred stock will not accrue or pay dividends, will be nonvoting, will be subject to mandatory redemption in 2013 at $50 per share and callable on an accreting redemption schedule beginning in 2002. It will also be convertible in certain circumstances at Weirton's option into registered common stock.

In addition, the City of Weirton will conduct an exchange offer and consent solicitation for its outstanding 8 5/8% pollution control revenue refunding bonds (Weirton Steel Corp. Project) Series 1989 due 2014 under which the bondholders would receive up to $33.8 million aggregate principal amount of new 9% secured pollution control bonds due 2012. The new bonds would also be secured by a second priority lien in the company's hot strip mill, No. 9 tin tandem mill and tin mill assets.

Lehman Brothers is the financial advisor and dealer manager for the exchange offers.

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