Bethlehem Steel Seeks Bankruptcy Protection
Bethlehem Steel Corp., a titan of American industry whose steel helped make the United States a world power in the 20th century, sought bankruptcy protection from creditors Monday after failing to overcome cheap imports, spiraling costs and a depressed economy.
The South Bethlehem, Pa.-based company filed for Chapter 11 bankruptcy protection and said it secured emergency financing of $450 million from GE Capital, the lease financing arm of General Electric Co., in a bid to return to sustained profitability.
Chairman and Chief Executive Robert S. Miller said Bethlehem has made considerable progress in reducing its costs and meeting increasing demand for high-quality products, but it must do more.
“Chapter 11 does not solve our problems,” Miller said. “It provides us a process and framework within which we can address and explore the significant issues facing the company.”
For a company that milled the steel used in such landmarks as the Golden Gate Bridge and Rockefeller Plaza and was the largest shipbuilder in World War II, it was a long fall in stature.
It played a major role in American industrialization, building the first U.S. aircraft carrier and spurring postwar expansion with the manufacturing of specialty steels for automobiles and machinery. The third-largest steel producer in the United States fell victim to globalization. Cheaper imports from Eastern Europe, South Korea and even Japan dragged down Bethlehem, for many years the No.2 steel producer behind U.S. Steel. The company is now saddled with $4.5billion in debt, more than its assets of $4.2 billion.
On Monday the company reported a net loss of $152 million, or $1.25 a share, compared with a year-ago loss of $35 million, or 34cents.
Analysts were expecting a much smaller loss of $1.01 a share, according to Thomson Financial/First Call. Revenue fell 17% to $825 million.
Since mid-1998, Bethlehem said, revenue had declined about $1.3billion annually, resulting in operating losses of $500 million and a negative cash flow since then.
Most recently, demand has been hurt by a sharp cutback in auto production, one of the two largest consumers of steel. The slowdown in construction, the other major customer for steel companies, has been another blow to the industry.
