Bethlehem Steel files for bankruptcy protection
Monday, October 15, 2001
AP Business WriterPHILADELPHIA (AP) -- Bethlehem Steel Corp., reeling from low-cost foreign imports and high labor and retiree-benefit costs, filed Monday for Chapter 11 bankruptcy protection.
The board of Bethlehem Steel, the nation's third-largest steelmaker, approved the plan at a meeting Sunday and the company said it filed the petition Monday in New York.
The filing came just weeks after the company replaced its chairman and chief executive officer Sept. 24 with turnaround expert Robert S. Miller, who led financial negotiations with bank lenders and the federal government leading to the Chrysler bailout package.
Miller said the company could not overcome the economic damage caused by low-cost imports and the slowing economy despite nearly $300 million in net cost reductions since mid-1998.
"Chapter 11 does not solve our problems," Miller said in a statement. "It provides us a process and framework within which we can address and explore the significant issues facing the company."
The company had laid off union and salaried employees and sold off some of its assets to stay out of bankruptcy, but said revenues still have dropped by about $1.3 billion a year since mid-1998, resulting in operating losses of about $500 million.
The company hopes to reduce debt, work with its unions to address money owed to its large numbers of pensioners, and seek a partner or buyer, Miller said.
Bruce Davis, attorney for the Bethlehem Steel Retired Employees Benefits Coalition, said he was invited to meetings Monday at which the move would be explained to employees.
Davis said the company now has fewer than 14,000 active employees and 74,000 pensioners.
Bethlehem Steel had lost money in four consecutive quarters, including a $1.2 billion loss for the first half of the year, which dropped its net worth to a minus $153.8 million.
Bethlehem was founded in 1904 by Charles M. Schwab, one of Andrew Carnegie's top lieutenants. The company's only losing years through 1981 were in 1932, 1933 and 1977.
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