Beth turns to finance expert

Robert S. Miller Jr. named chairman, CEO at steel maker

Oversaw Chrysler rebound

Executive has made career of rescuing troubled enterprises

September 25, 2001|By Kristine Henry | Kristine Henry,SUN STAFF

In a surprise announcement, Bethlehem Steel Corp. said yesterday that it hired a turnaround expert as its new chairman and chief executive officer in hopes of bolstering the company's shaky finances after a string of losses.

The Pennsylvania steel maker, which employs about 4,000 at its Sparrows Point plant in Baltimore County, named Robert S. "Steve" Miller Jr. to head the company. He replaced Duane R. Dunham, who was named president and chief operating officer.

Miller is the chairman of automotive-parts supplier Federal Mogul Corp., a non-executive position that he will retain.

He is best known for his tenure at Chrysler Corp., from 1979 to 1992. As the carmaker's executive vice president for finance, he helped negotiate the $1.2 billion federal loan bailout in the early 1980s that brought the company back from the brink of bankruptcy.

He then oversaw Chrysler's rebound, including the early repayment of the loan and a balance sheet that showed more than $1 billion in cash on hand by 1983.

Since then, he has made a career of trying to help troubled firms sort out their problems.

"He has created a one-person profession and that is rent-a-CEO," said Gerald Greenwald, the former chairman and chief executive of United Airlines parent UAL Corp., who worked with Miller at Chrysler. "He goes where there's trouble."

Miller said it is "way too soon" to predict what kind of changes he will make at Bethlehem.

"We will be taking a hard look at both what we need to do in terms of improving the labor-cost situation and government support," he said.

Bethlehem's stock rose 16 cents yesterday to close at $1.29, up 14 percent for the day and 28 percent from its 52-week low of $1.01.

"It looks like [Bethlehem is] pulling out all the stops," said Leo Larkin, an analyst at Standard & Poor's in New York.

Neither a salary nor a time line has been set for his tenure; Miller, 59, said he will accept whatever compensation the board of directors offers and will stay until Bethlehem, the nation's No. 2 steel maker, is on solid ground.

Bethlehem's finances have been deteriorating since 1999, when it lost $183 million, and in July the company was forced to renegotiate certain loan terms when it fell below the net worth level it was required to maintain.

It posted a net loss last year of $118 million, and in the first half of 2001 an operating loss of $216 million. One-time items put its net loss at $1.2 billion for the first six months and have given the steel maker a negative net worth - its shareholder equity as of June 30 was minus $153.8 million.

Bethlehem had liquidity (cash, cash equivalents and available credit) of $118 million as of June 30, which was a drop of 63 percent from six months earlier, according to its second-quarter earnings statement.

"It can't hurt, it sure as hell can't hurt," John Cirri, president of Steelworkers Local 2609, which represents workers at Sparrows Point's cold mill, said of Miller's appointment.

Benjamin R. Civiletti, a partner at the law firm Venable, Baetjer and Howard in Baltimore and a Bethlehem director, said Dunham is a "great leader and a great salesman."

"But the stress on the steel industry is so strong, so great, that you almost need a full-time person to deal with financial strategies. The financial planning, dealing with Wall Street and the unions and government opportunities - it's just too much for one person, " Civiletti said. "Miller has an enormously successful track record of coming in ... and lending that very kind of expertise."

He said it was in the past two weeks that the board decided a management change was in order.

Miller, whose career began at Ford Motor Co., left Chrysler in 1992 to join investment bank James D. Wolfensohn Inc., where he was an adviser to global real estate firm Olympia & York. The firm ended up in bankruptcy, and Miller likens his tenure there to a fighter pilot trying to fly a plane "after the wings were shot off."

In 1995 he took over the chairmanship of construction firm Morrison Knudsen Corp. in Boise, Idaho, and oversaw its restructuring and eventual merger with another construction firm. He remains a board member.

Miller became chairman and chief executive of troubled Waste Management Inc. in 1997 and handled its sale to USA Waste. He remains on the board of the new company, which retained the Waste Management name.

Bethlehem director Lewis B. Kaden called Miller, who was in Salt Lake City for a model-train convention, Thursday and asked if he would take the job. The full board of outside directors held a conference call Saturday and officially voted on the appointment, which is effective immediately.

Miller, who has an economics degree from Stanford University and a law degree from Harvard Law School, will move with his wife, Margaret, to the Bethlehem, Pa., area from Oregon.

In a separate announcement yesterday, Bethlehem said it has completed a consent solicitation on senior notes, which will help it secure a $750 million loan.

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