Bethlehem Steel Corp. sought to reassure nervous investors yesterday that the company is doing what it can to shore up its financial base after its stock price hit an all-time low.
Shares of Bethlehem dropped as low as $1.01 yesterday before closing down 7 percent at $1.31 - its lowest price ever.
Bethlehem said it expects to complete a $750 million financing package in the current quarter. It also said it will complete the sale of an iron ore facility and a short line railroad in the period.
"We got a lot of investor calls because of the stock level today saying, `Hey, what's going on?' " said Robert W. Bilheimer, a spokesman for the steel maker. "We're letting people know we are taking steps to improve liquidity."
The financing package was announced last month when the company released its second-quarter financial report, which showed its liquidity - cash, cash equivalents and available credit - had shrunk to $118 million as of June 30, down 63 percent from levels six months earlier.
The Pennsylvania steel maker, which employs about 4,000 at its Sparrows Point plant, had an operating loss of $99 million in the second quarter on sales of $911 million. But a one-time charge of just over $1 billion, related to a deferred tax asset, put the paper loss at $1.13 billion.
It also gave the steel maker a negative net worth - its shareholder equity as of June 30 was minus $153.8 million.
That caused Bethlehem to be in violation of a covenant on a $660 million credit agreement. The company was able to get a waiver on the covenant, but that expires at the end of January.
Bilheimer declined to comment on whether the prospective $750 million financing arrangement will put it in compliance with the net-worth covenant.
The company has announced other steps to cut costs, including laying off 11 percent of its salaried workers and closing of its coke-making operations at Lackawanna, N.Y., affecting about 340 people.
More than a dozen U.S. steel makers have filed for bankruptcy protection since mid-1998 - most blaming the recent surge of cheap imports - and many have wondered if Bethlehem will have to do so as well.
But J.P. Morgan Securities analyst Michael F. Gambardella said at the time the financing package was first announced in July that the cash infusion "puts to rest any liquidity problems investors thought the company would run into."
Duane R. Dunham, Bethlehem's chairman and chief executive, declined to discuss the possibility of a Chapter 11 bankruptcy protection filing.
Previously, he has said, "Bethlehem will not only get through these very difficult times but that we will be one of the strongest and most successful competitors in the steel business in the long run."
