Kaiser Steel Says Its Banks Granted Loan Extension

Ailing Kaiser Steel Corp. said Wednesday that its banks granted another extension on its nearly $11 million in overdue loans and that the Fontana company is attempting to develop several long-term financing plans.

Kaiser Steel’s four banks gave the company until Aug. 31 to make its loan payment, which had been scheduled for last Monday. The payment previously was deferred for 2 1/2 months when Kaiser agreed to omit $6.2 million in preferred stock dividends.

Under the most recent extension, Kaiser must continue to omit the dividend.

In addition, Kaiser, which posted a $16.8-million loss in 1985, said it failed to provide certain additional collateral in June to GATX Corp. as required by a lease agreement. Kaiser said that the two companies are discussing the matter and that Kaiser’s banks have said it must be resolved by July 14 as part of the loan payment extension.

Kaiser Chairman and Chief Executive Monty Rial said in a statement that the company is working with its investment bankers on several long-term plans, including possibly restructuring Kaiser’s preferred stock and refinancing the company’s coal division. Kaiser also is planning to develop an industrial park on the land surrounding its old Fontana steel mill, which it sold in 1984, Kaiser Vice President Claude Bradford said.

Most of Kaiser Steel’s problems can be traced to intense foreign competition in the fabricated steel products business and the sharp drop in energy prices, which has caused oil companies to stop buying steel products, Bradford said. Low energy prices also have hurt the company’s coal mining and marketing operations, but the division still is “quite profitable,” he said.

For the first quarter, Kaiser Steel recorded a $9.9-million loss on sales of $45.1 million, primarily because of an accounting charge connected to the sale of some land in Fontana.