|STALLED STEEL Newspaper plant project has been halted. (Photo by Martin Rosenberg for ENR)|
Executives of Havens Steel Co., an 80-year-old fabricator and steel erector that built some of the nations most prominent structures, are scrambling to save the company from becoming the first major corporate casualty of the worldwide spike in steel prices.
After filing for protection from its creditors March 18 in federal bankruptcy court in Kansas City, Mo., where the firm is based, Havens executives on March 30 met with the firms surety in Hartford, Conn., to iron out a survival plan. Whether they will succeed remains unclear. On March 24, U.S. Bankruptcy Judge Jerry Venters ordered the surety, St. Pauls Fire & Marine Insurance Co., to allow the release of project funds so that Havens can pay employees, subcontractors and vendors and continue work on six bonded projects through April 10.
The projects include a $62-million contract at the Miami International Airport and work on the Des Moines convention center. St. Pauls has bonds outstanding for $102.6 million of Havens projects and a potential bond penalty exposure of twice that amount, according to court documents.
Unbonded projects, representing 10% of Havens workload, have been halted until "the owner or contractor involved provides funding going forward on an advanced basis," says Havens attorney, R. Pete Smith. Havens Presdent Ken McCullough could not be reached for comment, nor could Scott Leo, a Chicago-based attorney for St. Pauls.
One unbonded job is a $200-million printing plant under construction for the Kansas City Star. The blue glass-clad structure rising in downtown Kansas City was inactive on March 29. A Star executive overseeing the work could not be reached for comment.
Earlier, St. Pauls had blocked payments to Havens as part of a dispute with Commerce Bank of Kansas City, which has first claim on the companys revenue. Havens owes Commerce Bank, its biggest creditor, $11.7 million. St. Pauls says it has paid out $6 million on Havens projects after costs exceeded bids. Havens had an estimated $100 million in sales in 2002 and employs about 700 people. Layoffs are anticipated as the firm cuts costs and there are concerns about Havens ultimate fate.
It is "better for my client if they can really survive," says Benjamin Mann, an attorney for Commerce Bank. But Havens predicament is so bad, "I dont think it is likely," he says. Mann says the firms difficulties will hamper its ability to obtain bonding to bid on new projects and deal with the rising price of steel. Mann claims Havens is "so close to the end, it will have a hard time not going over the edge."