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
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."