Bethlehem Steel Corp., the nation’s second-largest integrated steel manufacturer, has filed a voluntary petition under Chapter 11 of the Federal Bankruptcy Code in the US Bankruptcy Court for the Southern District of New York. The company has already secured a loan commitment for USD 450-million Debtor-in-Possession (DIP) financing from GE Capital, subject to court approval. This financing package, combined with other actions, should provide sufficient liquidity to meet ongoing operating needs. Bethlehem plans to continue steel production without interruption. Bethlehem is to undertake a reorganisation in order to improve the company’s capital structure, improve productivity and further reduce costs, particularly employment and healthcare costs, and to find a solution to its approximate USD 3-billion retiree healthcare obligation.
Although Bethlehem has accomplished nearly USD 300 million in net cost reductions since the middle of 1998, the company believes it was injured by what it regards as unfairly traded steel imports and the slowing economy. Since mid-1998, Bethlehem’s revenues have been reduced by approximately USD 1.3 billion annually. Resulting operating losses of approximately USD 500 million and negative cash flow since the middle of 1998 have severely impaired the company’s financial condition.
