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Laclede files for Chapter 11
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November 30, 1998: 7:16 p.m. ET
Steel company cites imports, falling prices as reasons for bankruptcy reorganization
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NEW YORK (CNNfn) - Laclede Steel Co. and two of its subsidiaries filed for Chapter 11 bankruptcy protection Monday, company officials said.
Chief Financial Officer Mike Lane cited a decline in the steel industry, problems with overseas imports, and falling prices as reasons for the bankruptcy move.
The company said the filing enables Laclede's banks to provide $85 million of debtor-possession financing to the St. Louis-based company.
Two of Laclede's subsidiaries -- Laclede Chain Manufacturing and Laclede Mid America Inc. -- filed for bankruptcy due to legal reasons, even though they have been profitable, Lane said.
Founded in 1911, Laclede has about 1,300 employees. Lane said there were no immediate plans for layoffs, but he added that the company will shut down one of its two pipe facilities. One facility, in Illinois, has about 180 unionized employees, while the other, located in the Philadelphia area, has 125 non-union workers.
"We're pretty optimistic we're going to emerge from this a much more viable company," Lane said.
Laclede (LCLD) was down 1/8 Monday to 5/16 in trading on the Nasdaq market.
"Steel Import Crisis"
The filing occurred the same day the U.S. Senate Steel Caucus held a hearing on "The Steel Import Crisis." Curtis Barnette, chairman and chief executive officer of Bethlehem Steel Corp., told the group that this is "a truly critical time for our nation's steel industry."
Barnette said the United States imported a record 18 million tons of steel in the first half of 1998 and a record 12.4 million tons in the third quarter, a 56 percent increase over the same period last year.
"The United States has become the world's steel dumping ground," Barnette said. "The docks and warehouses are full. The inventories remain at record levels. Yet unprecedented levels of unfair and disruptive steel imports continue to stream in from every corner of the globe."
Barnette said 12 domestic steel producers and two unions filed trade cases against hot-rolled carbon steel products from Russia, Japan and Brazil on Sept. 30. The U.S. Department of Commerce found "critical circumstances" in the cases of Japan and Russia on Nov. 23.
Kenneth Hoffman, an analyst at Prudential Securities Research, said this is the first time the Commerce Department has made such a ruling on behalf of the steel industry.
Hoffman said steel prices dropped 15 percent to 25 percent between July and September, which he said was "virtually unprecedented."
However, Hoffman said that when the industry filed cases in mid-1992, the price of steel went up 23 percent the next year, even though the economy overall had slowed down. 
-- From staff and wire reports.
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