Beth misses pension payment Cash-strapped steelmaker's fund falls further behind.

May 15, 1992|By Kim Clark | Kim Clark,Staff Writer

Cash-strapped Bethlehem Steel Corp. didn't make a payment to its pension fund in the first three months of 1992, the first quarter in nearly six years that the nation's second-largest steelmaker had not done so.

Bethlehem, which has 7,000 employees and about twice that number of retirees in Maryland, has one of the nation's biggest unfunded liabilities for a pension plan -- $1.02 billion.

Companies with unfunded liabilities owe more to their retirees and employees than they have set aside.

PaineWebber analyst Peter Marcus said the omitted payment is "not cause for alarm, but it certainly is a warning sign" of a cash shortage.

Ed Bartee, vice president of a Baltimore-area Steelworkers Union local, said most Bethlehem workers aren't worried much about the pension fund or the lack of the first-quarter payment. "I don't think this is anything new. They've been in arrears before," he said.

The Pension Benefit Guaranty Corp., which insures Bethlehem's pension fund, said yesterday that the company has been trying to reduce its unfunded liability but that the insurer is "concerned" by the decision to omit a payment.

Company spokesman Henry H. Von Spreckelsen said the decision not to make the payment wouldn't affect retirees, since the company still has plenty of money in its retirement fund.

Bethlehem, which has slowly been paying off its liability to the fund, will make a payment this year, he said.

The company has poured $744 million into the fund in the past three years, building up credits of $750 million.

"The payment wasn't required," Mr. Von Spreckelsen said.

"We've got a $750 million credit. We don't have to put any money into the fund for four years . . . but we will be making a payment this year."

Bethlehem's chief financial officer, Gary L. Millenbruch, said Bethlehem has "ample flexibility."

He said the company's finances are in far better shape than in 1986, when Bethlehem had an unfunded pension liability of $1.7 billion.

Because of layoffs and low interest payments on investments, the pension fund liability has risen by nearly $300 million in the past year, Mr. Von Spreckelsen said.

Bethlehem, which is expected to have 20,000 active workers supporting 70,200 retirees by the end of 1993, has a heavier pension load than most rivals.

The pensions at USX Corp. and Inland Steel Industries Inc. are fully funded, and Armco Inc.'s Armco Steel joint venture has a liability of $133 million.

LTV Corp. is trying to lighten its $2.2 billion in unfunded liabilities in bankruptcy court.

Bethlehem announced late last year that the recession and weak steel prices would force it to conserve cash.

It stopped paying its 10-cent-a-quarter dividend in January.

Dow Jones News Service contributed to this article.

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