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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (745)	8/27/2001 7:17:25 PM
From: craig crawford	Read Replies (1) \| Respond to of 1643

Credit may help Steel Bethlehem company trying to secure cash to avoid bankruptcy mcall.com 08/26/01 Few companies in American industrial history have displayed more resilience than Bethlehem Steel Corp. In the 97 years since Charles M. Schwab founded the company, Bethlehem Steel has endured the Great Depression, violent labor strikes, massive layoffs, financial losses and restructuring efforts. But today, Bethlehem Steel faces what some observers say is its stiffest challenge yet. The company hasn't enjoyed a profitable year since 1998. It has more liabilities than assets. Its cash is shrinking. Its debt is mounting. Its credit rating is in "junk" status. In addition, the U.S. steel industry is in shambles. Eighteen U.S. steelmakers have filed for bankruptcy in the past four years. And there is concern that Bethlehem Steel may join them. ................................................................................................................................ The company last reported a profit in 1998. Total losses since then are $1.6 billion -- including $1.27 billion this year. Bethlehem Steel's struggles are shared by other U.S. steel companies. They are reeling from prices that are lower than those seen in a generation. Steel that sold for $350 a ton two years ago recently sold for $235 a ton -- a 33 percent drop. The price declines are blamed on the slowdown in the U.S. economy and foreign producers willing to sell their products at a loss. Imported steel from Japan, Russia, Brazil, South Africa, Thailand and elsewhere now controls nearly 30 percent of the U.S. steel market, up from 19 percent in the mid-1990s. But foreign imports are only part of the U.S. steel industry's problem. Rising energy costs, inefficient plants and poor management decisions have also hurt, analysts said. ............................................................................................................................... Richard A. Henderson, a stock analyst who tracks Bethlehem Steel for Pershing/Division of DLJ, said lenders have two options. They can loan the company more money and hope it can return to profitability or refuse to supply additional credit and risk losing what's already been borrowed. "If a banker calls the loans and Bethlehem can't meet the obligation, then the banker has to take a write-off," Henderson said. "And I don't think the bankers want to take a write-off." ................................................................................................................................ Bethlehem Steel and other U.S. steelmakers are hoping that Congress will pass the Steel Revitalization Act, which would set a five-year quota on steel imports and offer other industry protections. Steelmakers also need the national economy to pick up to boost demand from customers such as automakers. Without an improvement in steel prices and demand, Vastola said, Bethlehem Steel's survival strategy could fail, since no company can continue to lose money forever.