In the face of a tanking stock price and millions of dollars in losses, Bethlehem Steel Corp. is supporting a shareholder proposal that urges the steel maker to "take the lead in fostering major industry consolidation in the United States."
Investment group Greenway Partners LP, which owns more than 8 million shares, or 6.9 percent, of Bethlehem's stock, has submitted a shareholder proposal that directs the steel maker's board to sell assets, buy back stock and pursue consolidation. The proposal was included in Bethlehem's proxy, which was filed yesterday.
Bethlehem officials have recommended that shareholders support the proposal. The company's annual meeting is to be held April 24 in Wilmington, Del.
"In light of Bethlehem's losses, we urge the board to cut expenses even deeper and faster than planned," the proposal states. "More than that, we urge Bethlehem to take the lead in fostering major industry consolidation in the United States. As noted in numerous articles, there is general acknowledgment that the major players must close inefficient plants, scale back production and consolidate."
New York-based Greenway, whose principals are longtime associates of corporate raider Carl Icahn, bought the bulk of its shares in August 1999 when they were about $8, which at the time was near Bethlehem's historical low. Shares dipped as low as $1.62 in December.
"We've told them they've got to do something out of the ordinary - extraordinary, bold - this is not a time to sit back and start thinking of different plans, they've got to act," Greenway senior managing director Alfred D. Kingsley, who worked for Icahn for 30 years, said yesterday. "They need to buy back stock but more importantly, the total steel industry needs to consolidate. It's happening in Europe and it's got to happen here."
Kingsley said Greenway is not telling Bethlehem whether it should be the acquirer or the party acquired, simply that drastic measures are needed.
"We're leaving that up to them," he said. "It could be a merger of equals, but there has to be consolidation."
The U.S. steel industry has been hit hard by imported steel that it argues is being sold for less than the cost of production, dragging down prices for everyone. At least nine steel makers have filed for bankruptcy protection in the past two years.
Bethlehem, which employs about 4,000 at its Sparrows Point plant in Baltimore County, lost $118.4 million, or $1.21 a share, in 2000 on sales of $4.2 billion, compared with a loss of $183.2 million on sales of $4.1 billion in 1999.
