The 206-year-old company, which produced the first solid forged and rolled wheel in the United States in 1904, reported nearly $225 million in secured and unsecured debt in a petition filed yesterday in U.S. Bankruptcy Court in Delaware.
Information on the company's assets were not immediately available.
Michael J. Farrell, chairman of FFC Holding Inc., parent of Burnham, Mifflin County-based Freedom Forge, said yesterday the tradition-rich forging company is not for sale.
'We have not entertained offers, and we're not anticipating selling the operation,' Farrell said. But he added the company's proposed plan calls for a review of its entire product line, equipment facilities and contracts for cost savings.
Farrell said no immediate layoffs are planned but did not rule out the possibility.
Freedom Forge manufactures railway axles and wheels, along with other forged metal products. The company employs more than 800 people, including 135 in Latrobe and the remainder at its Burnham facility.
The 113-year-old Latrobe plant, formerly called Latrobe Forge and Spring, manufactures steel and other alloys using a modern electric smelting furnace and hydraulic presses that forge and shape steel ingots into shafts and axles for the rail industry. Standard Steel purchased the plant in 1976.
In addition to soft market conditions, he said the company also has been hurt by high structural costs, rising energy prices and significant legacy costs related to the employee retirement plan.
Farrell estimated the company retirement plan covers 700 to 800 people. He said that at the end of last year, the pension plan was fully funded.
Unionized workers at both plants are represented by the United Steelworkers of America, and Farrell said existing collective bargaining agreements at both plants would likely be revisited.
'We don't have a target (layoff) list, but we have to change the way we do business,' said Farrell. 'We have to be more cost-efficient. We've had preliminary discussions here (Burnham) about reopening the contract, and both operations go hand-in-hand.'
In May 1997, members of Local 1551 of the USWA in Latrobe ratified a five-year contract that expires April 30, 2002. The contract with steelworkers in Burnham expires Oct. 31 this year.
Farrell said the company's reorganization plan calls for 'shared pain' among all key stakeholder groups, including investors, vendors, employees and management.
However, if all goes well, Farrell estimated the company could emerge from Chapter 11 protection by next March.
Trying to set an example, Farrell said he will receive a reduced salary as president and chief executive, but did not disclose the amount. He also said he has terminated the company's supplemental executive retirement plan for himself.
Chapter 11 bankruptcy allows a debtor to reorganize its finances and craft a plan that is acceptable to creditors.
Under Freedom Forge's proposed reorganization plan, secured creditors of privately held Freedom Forge will receive new debt or be paid off; while unsecured creditors and certain noteholders will receive equity. Freedom Forge owes unsecured trade creditors more than $19 million.
Farrell said bank debt is around $92 million, and that a new $10 million line of bank credit will allow the company to operate and meet all financial obligations.
Farrell said the company's foreign affiliates, including Valdunes Holding Co., a large forged wheel and axle manufacturer with plants in France and Belgium, remains profitable and is not part of the Chapter 11 filing. However, he said Freedom Forge is looking to sell the French operation and use the proceeds to pay down debt.
