DNR studies effects of bankruptcy by Doe Run

ST. LOUIS -- Missouri taxpayers could be forced to pay cleanup costs in Herculaneum if the financially troubled company that runs the nation's largest lead smelter files for bankruptcy, the state's chief environmentalist told the St. Louis Post-Dispatch.

Stephen Mahfood, the Missouri Department of Natural Resources' chief, said the state agency is studying the impact of a possible bankruptcy by Doe Run Co.

"If the company goes bankrupt, the government agencies could very well be on the hook for the cleanup and dealing with the issues of contamination in Herculaneum," Mahfood told the newspaper for a copyright story Sunday.

Messages left Saturday night with Doe Run were not immediately returned.

On March 15, Doe Run said it was unable to make $15 million in interest payments on $305 million in bond debt, and that it was negotiating with creditors. The company has attributed the problem to depressed prices, among other things.

At that time, Doe Run chief executive Jeffrey Zelms said the company had no foreseeable plans to file for bankruptcy, calling that scenario "not a consideration at the moment."

"If things turned to hell, it'd be the only alternative. I don't even consider it an option," Zelms said then.

Zelms said Doe Run presented an offer to bondholders he declined to identify. Zelms said if the offer was accepted, Doe Run would become a restructured operation and would not be "broken up."

"Our objective is to get this company restructured, to reduce the debt load substantially and to pay our creditors 100 pennies on the dollar," Zelms said.

Doe Run has more than $26 million in environmental cleanup actions it must take to satisfy regulators.

The company's 110-year-old Herculaneum smelter has caused contamination from lead, arsenic, cadmium and other toxic substances.