Doe Run executive says firm doesn't plan bankruptcy

ST. LOUIS -- The Doe Run Co., troubled by low lead prices and contamination around its smelter in Herculaneum, has no plans to file for bankruptcy, its chief executive said.

Jeffrey Zelms said the company failed to pay about $15 million in interest due Friday on $305 million in junk bonds. Despite financial troubles, Zelms said bankruptcy isn't on the company's horizon.

"Bankruptcy is not a consideration at the moment," he said. "If things turned to hell, it'd be the only alternative. I don't even consider it an option."

Zelms said Doe Run presented an offer to its bondholders, whom he declined to identify. The only thing Zelms would say about the offer is that if it's accepted, Doe Run would become a restructured operation and would not be "broken up."

Zelms said bondholders and Renco Corp., financier Ira Rennert's privately held company that owns Doe Run, will infuse a "very significant amount" of cash to improve Doe Run's bottom line. When Doe Run makes its formal offer, bondholders will have 20 working days to respond, Zelms said.

"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. He said Doe Run's other debt includes $40 million in revolving credit.

Aware of commitments

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

"As long as we are here, we'll meet those commitments," Zelms said, adding that the bondholders are aware of those commitments and agree to meet them.

Meanwhile, Missouri officials backed off from a demand that Doe Run submit new plans by Friday to deal with health and pollution issues in Herculaneum. The company's 110-year-old smelter has caused contamination from lead, arsenic, cadmium and other toxic substances in the city of 2,800, located about 30 miles south of St. Louis.

Stephen Mahfood, director of the state Department of Natural Resources, called for the plan March 8 in a letter to Doe Run. The letter followed the release of a state study showing that 28 percent of Herculaneum children tested in 2001 had lead poisoning. On the smelter side of town, the rate was 45 percent. The national rate is about 7.6 percent.

Instead of submitting plans, the company sent letters to Gov. Bob Holden and DNR, offering to meet early next week to discuss pollution problems.

"At this point, we are accepting that letter as their response," said Connie Patterson, a spokeswoman for DNR.

In a letter sent Thursday, Sen. Kit Bond, R-Mo., asked Holden to say by March 25 whether Missouri wants up to $3 million in federal money that Bond has pledged to secure for a long-term health study on Herculaneum residents.