The Indianapolis Star from Indianapolis, Indiana • Page 21

THE INDIANAPOLIS STAR- PACE 21 INUVblVlBbK Z7, 1985' Tattered Continental seeks new shelter in bankruptcy The Tape -JflftJ Durable Goods Seasonally adjusted new factory orders in billions of dollars. Finance Down 2.1i 109 107 105 103 101 99 97 95 By ERIC B. SCHOCH STAR STAFF WRITER After emerging from bankruptcy protection in 1982, officials at Continental Steel Kokomo, looked to modernization, including the installation of a continuous caster mill completed this year, as the means to returning the company to profitability. But the company has returned instead to federal bankruptcy court in Indianapolis, saying that the benefits of new steelmaking facilities have yet to be reaped. Continental filed for protection from creditors under Chapter 1 1 of the bankruptcy code on Monday following a telephone conference call among company officials on Sunday.

The bankruptcy case has been assigned to Judge Richard W. Vandivier. In a prepared statement. Continental said it was forced to file "because of the inability of the company as of yet to realize benefits of its modernization program, its higher than expected operating costs, and the heavy burden of its pension and other obligations." The operating costs were "across the board," and included greater costs of starting up the new facilities than had been anticipated, Richard F. Egge, the firm's treasurer, said Tuesday.

The company completed installation of a $21 million continuous casting facility a modern, more efficient steelmaking process earlier this year, aided by a $4 million Urban Development Action Grant from the city of Kokomo. Earlier, the company had installed a new rod mill. Continental had expected it would benefit from the new facll- substantial cost savings, after this current period of transition, and emerge from Chapter 1 1 a profitable and successful company." The company has undergone considerable turmoil in Its top ranks this year. In July. President Thomas I.

Sigler was placed on an unspecified "special assignment" and an office of the chairman of the board, consisting of the company's chairman, vice chairman and a special assistant to the chairman, took over the president's duties. In September, eight members of the board of directors, including chairman Howard R. Hawkins, resigned, citing the company's inability to obtain liability insurance for directors. Pierre J. Stanis, a financial consultant to the company who was named chairman in September, resigned from the board while remaining a consultant with Wheeler's arrival.

Company workers, represented by United Steelworkers Local 1054, approved a new contract in 1983 accepting reductions in wages and benefits in exchange for a stock-based profit-sharing plan for employees. Major unsecured creditors, according to the bankruptcy filing, include Public Service Indiana, $1,389 million: Morgan Construction Co. of Boston. Great Lakes Carbon Co. of Chicago, and Blue Cross and Blue Shield of Indiana.

$479,000. ities sooner than it has. Egge said. The company, which employs about 1,100 persons in Kokomo making a variety of steel products, said it expects to continue operating. About 160 persons were laid off last Friday, said Egge.

The company, in its filing, said it had total assets of $104,944,000 and total liabilities of $98,021,000. The company reported a net loss for the first six months of the year of $11.9 million, up from a net loss of $9.5 million during the first six months of 1984. Continental reported net losses or $25,358 million in 1982, $9,938 million in 1983 and $19,954 million in 1984. Last week the company announced that it had been unable to make the first payment due Nov. 15 on the financing of the caster.

In its bankruptcy announcement, the company said It has reached an agreement with its principal secured lender for financing of operations while under Chapter 11. It said that agreement would be presented to the bankruptcy court "shortly." The bankruptcy petition was filed on the same day that the firm's new chairman of the board of directors, president and chief executive officer. Jack R. Wheeler, assumed his new posts. With Wheeler in office and the continuous caster and a new rod mill on line.

Continental said It "expects that it can achieve ONDJ FMAMJ JA SO 1984 1985 UPI Graphic 'Moonlight Special' a fare saver Eastern, CF AirFrcight offer service Merchants, banks will By BILL KOENIG STAR STAFF WRITER Two Frenzel-family controlled financial institutions agreed Tuesday to consolidate when Merchants National Corp. said it would acquire Union State Bank in Carmel. The development means that all three Carmel banks will be subsidiaries of the "FJIg Three" Indianapolis holding companies. Tuesday's announcement was not unexpected because of the Frenzel ownership of Merchants and Union State. Otto N.

Frenzel III, Merchants chairman and chief executive, has been chairman of Union State Car-mel's largest bank with $145 million in assets since 1965. Merchants and Union State officials said bringing the Carmel bank under Merchants made sense. "Merchants needs representation In that growing Hamilton County market," said Donald W. Tanselle, Merchants National president. "All we have in common now are shareholders.

We needed a direct involvement In that marketplace." Thomas M. Fiedler. Union State Hank vice chairman, said. "We have some of the same services Merchants has, but not all." The official said becoming part of Merchants would increase Union State's access to services and facilities of the Indianapolis holding company. 'These are the kinds of services a small bank like ourselves finds hard to Justify." For example.

Fielder said Union State's trust department is limited. As a separate bank, he said, "We don't have a staff large enough" to offer the investment opportunities of bigger institutions. In particular, the vice chairman said Union State currently has difficulty attracting corporate trust business. As a unit of Merchants, Fied a a is One way, unrestricted fares from Indianapolis are $59 to Houston, Atlanta or Kansas City; $69 to Philadelphia. Orlando or Miami: $99 to Los Angeles and $109 to San Francisco.

Seattle or Portland. Eastern said Moonlight fares are lower because the planes also haul CF AirFreight loads In the baggage compartment. Passengers must carry on all their baggage. CF AirFreight. based in Palo Alto.

said adding Indianapolis will "greatly enhance" the company's ability to sell Its cargo service in the Midwest. Red-eye flights take their name from the bleary look passengers have due to lack of sleep. There's a new low-fare option for Indianapolis air travelers who don't mind "red-eye" flights. Eastern Airlines and CF AirFreight said Tuesday they have added Indianapolis to the 15 cities served by their overnight "Moonlight Special" flights. The Moonlight service, started last April, consists of early-morning passenger-cargo flights, most of them flying between Eastern's hub in Houston and connecting cities.

Indianapolis service will start Dec. 16 with one round trip daily to Houston, leaving at 1:28 a.m. Early morning connections can be made there to nine other cities served by the Moonlight Special. FROM STAR WIRE SERVICES Tax reform fought The U.S. Chamber of Commerce, charging the tax revision bill awaiting House action could "de-industrialize America." called on President Reagan and Congress to abandon the current struggle for tax simplification.

The nation's largest business trade association said it was prepared to mount a heavy lobbying effort to defeat the bill approved last weekend by the Democratic-controlled House Ways and Means Committee as well as the president's plan. Both measures would completely rewrite the tax code. The House version would shift the tax burden away from individuals and toward businesses more than would the administration plan. Profit checks shrink Profit-sharing checks distributed among more than half a million General Motors Corp. workers next year will be somewhat smaller due to lower earnings, GM Chairman Roger B.

Smith said. Smith said 1985 earnings will not match the record profit of $4.5 billion in 1984, and that consequently profit-sharing checks to be distributed in the first quarter of 1986 will be "probably somewhat less" than those handed out last year. A typical GM worker last year received $540 in profit sharing. Texaco fights award Texaco Inc. detailed a legal counterattack against a Texas Jury's historic $10.53 billion award to Pennoil Co.

after finding Texaco had Improperly obtained ownership of Get-Jy Oil Co. Texaco appeared to rule out any bankruptcy filing. It also served notice that If it ultimately is forced to post an appeal bond of $12 billion "or anything like it." it will consider (his a violation of the Texas and U.S. constl-'tutions. Medicare outguessed Hospitals receiving Medicare payments recorded 1 above-average profits during the first year of a new payment strategy that the Industry had said might cause substantial losses, says an Internal report by the Health and Human Services Department.

The report said a survey of 892 hospitals in nine states showed average profits of 14.12 percent in 1984. the first year of Medicare's cost-cutting prospective payment system, about triple the average profit on all patient revenues in preceding years. Construction index Construction contract awards advanced 2 percent In October to a new high of $238.1 billion, the F.W. Dodge Division of McGraw-Hill Informations Systems Co. reported.

The Dodge Index (base 100. 1977) climbed to 169. surpassing a strong 166 In September, after remaining In the 162 range for six months. The Index measures, nationwide, the value of newly-started construction that will be brought to completion In the months ahead. Moscow borrowing A group of mostly American banks, led by First National Bank of Chicago, has agreed to lend the Soviet Union $400 million at low Interest rates to buy U.S.

and Canadian agricultural products. Analysts said the Soviet Union has been tapping commercial lenders In the west more this year, trying to make up the shortfall It has suffered in export earnings due to declining oil prices and production. PORTER FIELD lly JOF. MARTIN "Why li it I'm always the one that has to say, 'Why Is It we have to do all the II' TbsWw Carmel merge ler said Union State can tap into the trust department of the larger Merchants. "Merchants has a trust department that watches the market every day." Hamilton County has been one of the top priorities of the major Indianapolis holding firms.

The county's population rose by 51 percent between 1970 and 1980. And it is one of Indiana's most affluent counties. "It has the prospect to be the No. 1 or No. 2 in growth for the next ten years," Tanselle said.

After cross-county banking was legalized this year, the Indianapolis holding companies both made moves into Carmel. Indiana National Corp. agreed to buy Fidelity Dank of Indiana with $84.45 million In assets. American Fletcher Corp. followed with its acquisition of Carmel Hank and Trust the county's smallest bank, with $15.3 million In assets.

Tanselle and Fiedler said those steps did not cause the Merchants acquisition of Union Stale. Ike G. Hatalls. president of independent Wainwright Bank and Trust Co. in Noblesville.

predicted little change overall. "It's going to be more visibility for the Indianapolis banks In our market." he said. "But from a competitive standpoint, we're still in the same ball game." American National Bank of Noblesville, the county's biggest bank with $204.2 million in assets, would not comment The transaction will occur as stock swap. Holders of U.S. Bancorp, Union State's holding company, will receive Merchants shares according to a complicated formula.

If the deal were finalized now. U.S. Bancorp holder would get 2.66 shares of Merchants for each share. The actual figure will be determined when the deal closed, which Merchants expects In the third quarter of 1986. ell's stores In the Tcrre Haute area and Peoria.

111., employees represented by other locals are considering similar contracts. Voris said. Vorls described the contracts as Innovative because they give employees a way. through membership on committees to be set up at every store, to help manage the company and operate the stores. Called "participatory management," the approach calls for employees to "get involved In problem-solving recommendations and marketing the store In their neighborhood." Vorls said.

Senior employees can earn yearly bonuses of as much as several thousand dollars each If See LOWELL Page 23 102.614 cars and trucks, compared to 87.224 during the previous 10-day period and 125.495 during the same period a year ago. Ford sold 47.236 units, compared to 31.248 during the previous period and 60.568 a year ago. Chrysler sold 23.285 units, compared to 20,895 during the previous period and 29.428 a year ago. And the HP Vectra is backed by a solid one-year warranty from Hewlett-Packard. Considering what the IBM-compatible HP Vectra will do, why wait? With all the money you'll save now and at tax time Graham Introduces the HP Vectra from Hewlett-Packard with a great year-end deal.

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