Inland Steel Co. said Monday its board approved a plan to restructure into a holding company, dividing its steelmaking operation and Ryerson steel service center business into separate subsidiaries.
The move would protect the company`s profitable Ryerson unit if the money-losing steelmaking subsidiary ever defaulted on its long-term debt, as well as ease the way if Inland diversifies or forms a joint venture.
If shareholders approve the restructuring, the Chicago-based company said it may sell a minority of the steelmaking unit`s common stock to the public for cash. In that case, the steelmaking unit wouldn`t be a wholly-owned subsidiary of the new holding company.
Inland, the nation`s fourth-largest steelmaker, also said:
— It is considering again trying to buy J.M. Tull Industries Inc., the Norcross, Ga.-based specialty-steel distributor acquired last year by Bethlehem Steel Corp. after an unsuccessful hostile takeover bid by Inland.
— It expects its losses to continue in the first quarter.
— It filed a registration statement Monday with the Securities and Exchange Commission for a public offering of 3 million common shares.
Inland said the restructuring would create a single publicly held holding company, Inland Steel Industries Inc., comprising two subsidiaries: Inland Steel Co., its steelmaking operation; and Inland Steel Services Holding Inc., its Ryerson steel service center.
Currently, Ryerson is a subsidiary of Inland, the parent company.
Inland said its First Mortgage Bonds outstanding–the bulk of its long-term debt of about $725 million–would remain the obligation of its steelmaking subsidiary only. Thus, Ryerson apparently wouldn`t be affected if the steelmaking subsidiary defaulted as a result of continuing steep financial losses.
Inland also noted the restructuring would ”facilitate the entry into new businesses and the formation of joint ventures or other business combinations with third parties.”
In an interview with The Tribune last month, Frank W. Luerssen, Inland`s chairman and chief executive officer, said the steelmaker was ”looking for other opportunities to expand our business,” though he expected Inland to remain ”well within our experience capabilities.”
Shareholders will vote on the restructuring at Inland`s annual meeting April 23.
Inland forecast that a first-quarter loss from continuing operations
”could approximate” its fourth-quarter loss of $41.3 million before taxes and nonrecurring items.
The steelmaker has posted losses totaling $455 million over the last four years.
