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Bethlehem Steel Corp. Oct. 15 filed a voluntary petition under Federal Bankruptcy Code Chapter 11 in U.S. Bankruptcy Court for the Southern District of New York.
Despite cutting net costs nearly $300 million since mid-1998, Bethlehem Steel officials claim the company couldn't overcome record steel-import levels and the sluggish North American economy that's led steel producers to lower prices, production and shipments.
Bethlehem Steel — which owns and operates eight short lines — plans to rely on Chapter 11 protection to provide the company time to stabilize finances, and develop and implement a strategic plan to restore profitability. For now, the company's operations would proceed without interruption.
"[We've] made considerable progress in reducing costs and meeting customers' increasing demand for high-quality products — however, we need to do more," said Robert Miller Jr. in a prepared statement.
Miller, who Sept. 24 was named Bethlehem Steel's chairman and chief executive officer, believes Chapter 11 won’t solve the company's problems, but offers Bethlehem Steel a process and framework to address problematic issues.
Bethlehem Steel, the nation's second largest steel producer with about $2.6 billion in annual revenue, recently secured a $450 million loan commitment from GE Capital, subject to bankruptcy court approval.
The company also plans to work with United Steelworkers of America to find ways to improve productivity and further cut costs — particularly employment and healthcare expenses, and Bethlehem Steel's $3 billion retiree-healthcare obligation.
Prior to its Chapter 11 filing, Bethlehem Steel Oct. 1 reached an agreement with Genesee & Wyoming Inc., under which GWI purchased the steel company's 52-mile South Buffalo Railway Co. for $33.1 million cash and $3.3 million in assumed liabilities.
Bethlehem Steel's current short line properties include three-mile Brandywine Valley Railroad; one-and-a-half-mile Cambria and Indiana Railroad Co.; 29-mile Conemaugh & Black Lick Railroad Co.; 66-mile Lake Michigan & Indiana Railroad; 10-mile Patapsco & Back Rivers Railroad Co.; eight-mile Philadelphia, Bethlehem and New England Railroad Co.; five-mile Steelton & Highspire Railroad Co.; and six-mile Upper Merion & Plymouth Railroad Co.
The company also owns and operates intermodal services company BethIntermodal, and BETHTRAN, which provides transportation management and logistics services.