A story in yesterday's Money Today incorrectly reported tha two units of McCall Coal Co. Inc. filed for bankruptcy. McCall Coal, which owns 80 percent of Masteller Coal Co. and 100 percent of the defunct McCall Air Co., filed for Chapter 11 protection but those subsidiaries did not. The Evening Sun regrets the error.
Jno. McCall Coal Co., one of the nation's biggest coal exporters and a top shipper through the Port of Baltimore, has filed for bankruptcy and is considering going out of business altogether.
Founded in 1928, it is one of the largest privately held firms in Baltimore.
McCall filed Friday for protection from creditors under Chapter 11 of the federal bankruptcy code after several creditors filed for an involuntary Chapter 7 liquidation of its assets.
FOR THE RECORD - CORRECTION
"We are still assessing the tools we have to work with and are trying to determine how best to proceed," said M. Philip Lehr, McCall's president and chief executive officer.
Chapter 11 is generally sought by companies interested in restructuring their debts and continuing in business. But Lehr said McCall may use it to liquidate its assets under its own direction.
"This is a dynamic situation and there are a number of cards here and we are looking at them separately and as a whole," Lehr said.
Chiefly known in the industry as a coal exporter, McCall also owns and operates mines. It was this end of the business that caused the trouble, Lehr said.
He declined to provide specific figures, but said the mining operations lost "millions" of dollars. As a result, McCall has lost money for the past several years, said Lehr, a former vice president of marketing who was appointed president in May.
"Clearly, we have been struggling . . . The board of directors made management changes in mid-May in the hopes of turning the company around, but the efforts may have been too late," he said.
In its filing in federal court in Baltimore, the company reported assets of $39.8 million and liabilities of $29.5 million with secured debts of about $3 million. Employment at its headquarters at 6212 Frankfort Ave. is down to about 30, about half what it was several years ago.
With sales offices and mining operations, the company employs several hundred people nationwide. It owns some property in Western Maryland, but is not mining coal in the state.
Trouble has been brewing for some time at McCall. A deal last September to sell its assets to Mapco Coal Inc. of Tulsa, Okla., fell apart before it could be completed. Instead, Mapco bought only the Atlantic Coal Co., in which McCall was a major investor.
A decision by Signet Banking Corp. of Richmond, Va., to revoke a $10 million line of credit earlier this year severely damaged the profitable coal brokerage end of the business, according to Barry Rosen, the local attorney for Shell Oil Co. in the bankruptcy and a partner with Gordon, Feinblatt of Baltimore. Shell's coal mining division is a creditor.
In recent months, creditors began filing lawsuits seeking money from McCall.
Among the other major creditors are Mapco, $4.6 million; Norfolk Southern Corp. railroad of Norfolk, Va., $2.3 million; CSX Transportation railroad of Baltimore, $1.1 million; Consolidation Coal Co. of Pittsburgh, $1.1 million; Consolidation Coal Sales of Baltimore, $183,000; and Curtis Bay Co. coal terminal in Baltimore, $90,800.
Creditors met Aug. 24 in Baltimore with the company and concluded that bankruptcy was the best course, said Todd Malejan, an attorney with Shell Oil Co.'s coal division.
Shell, which is owed about $1 million, is one of three creditors who asked the court for involuntary bankruptcy last week, Malejan said. McCall exercised its right to convert that to a Chapter 11 proceeding, he said.
"Nobody wants to put somebody into bankruptcy . . . The only thing I know is we didn't get paid," Malejan said.
Rosen said creditors gave the company enough time to complete some transactions and then took action. He said he doubted the company could restructure and survive.
If McCall does go out of business, it could cut into coal trade through the Port of Baltimore. The company shipped most of its coal through Baltimore and Norfolk.
McCall has been a top exporter at the port for many years and last year was the second largest coal shipper at the port, exporting 983,000 tons of the 7.3 million tons that crossed the docks here, according to Philippe Masiee, vice president/general manager of W.J. Browning Co. Inc., coal agents for McCall.
"For Baltimore, McCall is a very important shipper," Masiee said.
The Baltimore Business Journal this year ranked McCall as the fourth largest privately held firm based in the Baltimore area, based on 1988 revenues of $335 million.
Although sales of U.S. coal have been strong in recent years, foreign competition and oversupply have held down prices and profits, said Richard Lawson, president of the National Coal Association. McCall is a member of the trade group.
"The industry has been consolidating and some companies have been slow to catch up," Lawson said. He said he did not know what the problems were at McCall but that they probably were not indicative of an industrywide slump.
He said McCall's mining operations produced between 500,000 and 750,000 tons of coal last year, ranking the company about 110th among coal producers in the country.
McCall's bankruptcy filing includes the parent company, Jno. McCall Coal Co. Inc., an exporting subsidiary called Jno. McCall Coal Export Co., a mining subsidiary called Masteller Coal Co., and a defunct charter airline subsidiary called McCall Air Inc.