Geneva watching bill to bail out industry
Measure 'could be helpful,' firm's chief financial officer says
VINEYARD, Utah County -- Geneva Steel could get in on a billion-dollar taxpayer-backed loan program the U.S. Senate is contemplating for the beleaguered steel industry.
"Yes, we support the bill," said Dennis Wanlass, chief financial officer, noting some of the industry giants don't favor it. "If in fact they can get it through (Congress) and get it through in a timely manner, it could be helpful."The bill would provide $1 billion in loans to domestic steel producers injured by low-priced imports and $500 million for U.S. oil and gas companies hurt by sagging prices. Taxpayers' costs for the programs is estimated at $270 million.
Sen. Bob Bennett, R-Utah, who serves on a Senate steel industry caucus, is a co-sponsor of the measure. He will support the legislation even though it needs some work, a Bennett spokesman said.
Geneva blames primarily cheap foreign steel for driving it into Chapter 11 protection in U.S. Bankruptcy Court earlier this year. The imports drove prices down and decreased demand for the plant's plate and coil products. Geneva is among at least three steel mills nationwide to declare bankruptcy the past year.
Wanlass described the loan program as similar to the government bailout of Chrysler several years ago. The government, he said, would act as a backstop by guaranteeing the funding mechanism.
"Whether we can take advantage of it or not depends on how things settle out," he said.
Wanlass said it is his understanding that the minimum loan would be $50 million while the maximum would be $250 million.
A federal judge approved a $125 million loan package for Geneva in February. The line of credit will help keep the company afloat while it attempts to reorganize under Chapter 11.
Geneva will be back in bankruptcy court next week trying to persuade a judge to approve a $1.6 million executive bonus plan. Company officials say the incentives are needed to keep top administrators from quitting.
Sen. Robert Byrd, D-W. Va., told the Associated Press the future of the steel industry is at stake.
"Are we going to ship another U.S. industry, the steel industry, overseas? Are we going to allow foreign entities to make ghost towns of our steel-dependent communities?" he said.
Senators opposed to the bill argue that the extra spending would be taken from Social Security surpluses -- money Republicans pledged not to touch this year.
Perhaps the best thing that might emerge from the debate, Wanlass said, is that it puts the struggling industry in the sights of various people.
Meantime, the U.S. Department of Commerce is expected to decide soon whether to impose duties on foreign countries for "dumping" low-priced plate steel into U.S. markets. An earlier ruling on a steel coil has caused prices to stabilize and production volumes to go up, Wanlass said.
Also in somewhat related action Thursday on a different bill, the Senate Finance Committee adopted an amendment by Sen. Orrin Hatch, R-Utah, to an omnibus trade bill that is also designed to stop dumping of below-cost steel in America by other nations.
Hatch's amendment would require the president to consult with the steel industry before waiving penalties on other nations for "dumped" steel.
Hatch complained that the Clinton administration has waived penalties on the Ukraine and Russia for illegally dumped steel because it worried about "civil strife among Russian steel workers" -- but did not consider the effect on U.S. steel.
Hatch told the committee, "I have to say that I am more concerned about fair trade for tens of thousands of American steelworkers and American companies."
Deseret News Washington Bureau correspondent Lee Davidson contributed to this story.
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