CF&I Steel Corp., currently operating under protection of Chapter 11 of the U.S. Bankruptcy Code, has secured a $10 million line of credit from Congress Financial Corp.
The Pueblo, Colo.-based manufacturer of railroad rails and nine of its subsidiaries filed for reorganization with the U.S. Bankruptcy Court for Utah last month.Steven J. McCardell, an attorney with the Salt Lake firm representing CF&I, said the line of credit "provides a cushion in case there is an unexpected downturn in the operations of the company and unforeseen cash requirements arise."
McCardell said CF&I believes there is little chance of that happening and the company expects its operating cash flow should continue to meet normal needs.
"More importantly, the line of credit should give the company's vendors and customers confidence that they can continue to deal with CF&I. It lets customers know that the orders they place with the company will be met and it lets vendors know that goods and services will be paid for," he said.
McCardell said operations of the company and its subsidiaries, including CF&I Fabricators of Utah, which produces reinforcing bar and wire mesh for use in the construction industry, all are doing well.
At the time it petitioned for protection under Chapter 11, CF&I said it was being burdened with meeting its contributions to an underfunded pension plan. It estimated the total underfunded liability of the plan at approximately $140 million.
The company said that a series of economic events, including the failing energy industry in 1982 and 1983, led to a downsizing, which dramatically increased the number of retirees and reduced its ability to fund the pension plan.