Kansas City-based steel fabricator files for bankruptcy

KANSAS CITY, Mo. (AP) -- Haven Steel Co., a design and fabrication company struggling with the rising price of scrap steel, filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code on Thursday.

The filing came after its main lender, Commerce Bank of Kansas City, sought to seize assets in Ottawa, Kan., where Havens has a steel fabrication plant, and at company headquarters in Kansas City.

"We gave them a deadline and they were unable to meet it," said Benjamin Mann, an attorney for the bank.

The company has fixed-cost contracts on large commercial projects around the country, and it has been losing money on many of them as steel prices rise almost every week. Commerce, which sought repayment last month, was owed about $13 million, since reduced to $11.7 million.

The abbreviated Chapter 11 petition filed Thursday did not list total liabilities or assets, but said the company owed about $21 million to its 20 largest unsecured creditors.

Meps International, a steel consulting firm, reported last month that the price of hot-rolled coil steel hit $482 in February, up 66 percent from June. Havens' fixed-cost contracts have left it vulnerable to the rapidly rising prices.

Prior to the filing, president and CEO Ken McCullough said he hoped that Havens could reolve its problems.

"That's all I can say right now," he said.

On Wednesday, 40 steelworkers at the Iowa Events Center in Des Moines, a $218 million arena and exhibit hall project, were sent home after Havens was unable to meet payroll. Havens has a $15.5 million structural steel contract at the center. The Des Moines Register quoted Mark Stevens, the center's project manager, as saying that Havens was "in some serious financial trouble."

Steek fabrication work on The Kansas City Star's $200 million printing plant project in downtown Kansas City also stopped Wednesday. Randy Waters, vice president of production for The Star, said he hoped work could resume Friday or Monday.

Mike Bright, business agent for Ironworkers Local 10, which represents Havens steelworkers, said the company had fallen behind on payroll and fringe benefits in recent weeks.

Havens, a privately held company founded in 1919, is thought to have about 700 employees. Hoover's online, a business reporting service, estimated its sales in 2002 at $133 million.

Havens' bankruptcy attorney, R. Pete Smith, said the bankruptcy filing was triggered by a dispute between Commerce and Havens' bonding company, a subsidiary of St. Paul Cos. in St. Paul, Minn. After the bonding company advanced money on some of Havens' projects to make up for bid shortfalls, it sought to collect on Havens' receivables, in which Commerce has a security interest.

Smith said that Havens' biggest ongoing job, a $62 million contract at Miami International Airport, was at the heart of the dispute, with the bank and the bonding company both laying claim to Havens' accounts receivable from that project.

"We tried to work out an agreement under which Havens could continue to operate outside Chapter 11 and ensure the bank that its collateral wouldn't be diminished," Smith said. "But it didn't happen."