The Beloit Chronicles - Part 3
June 7 to December 31, 1999
This is part three in a six part series that chronicles
the events that led to the closing of Beloit CorporationThis information was compiled from various news sources including, but not limited to newspapers such as, The Beloit Daily News, The Rockford Register Star, The Janesville Gazette, The Milwaukee Journal Sentinel, Capital Times of Madison, WI, financial magazines and publications, Internet news and financial sites and personal e-mail contributions. All information is factual as published without personal commentary or judgment.
June 7, 1999 - Harnischfeger Declares Chapter 11 bankruptcy
The Beloit Daily News, The Milwaukee Journal Sentinel and many other newspapers in the U.S. and abroad carried the story that Harnischfeger Industries, the parent company of Beloit Corporation had declared chapter 11 bankruptcy.
June 8, 1999 - Beloit Corporation appears unaffected by Chapter 11
Harnischfeger Industries, Inc.'s declaration of bankruptcy means ``business as usual for all our operations,'' including Beloit Corp.,said David Brukardt, Harnischfeger director of corporate communications.
June 9, 1999 - Trinity 1 fund and Ex-CEO sold chunks of stockTrinity I Fund and Jeffery T. Grade, major people involved in Harnischfeger Industries Inc. bankruptcy on June 7, sold major blocks of stock in the past two weeks. According to a filing, Trinity's sold 12,000 shares for $8.06 the day after Grade and Francis Corby Jr. Grade owns more than 1.1 million shares of Harnischfeger stock, sold 15,385 shares the day the firm announced its huge quarterly loss at $2.563. Grade, according to SEC documents, sold his stock at $6.68 a share for a total of $102,772.
June 15, 1999 - Creditors group appointed for Harnischfeger case
The U.S. trustee handling Harnischfeger Industries Inc.'s Chapter 11 bankruptcy case in Delaware has approved the formation of a creditors committee. John (Jack) D. McLaughlin, acting as the trustee in the case, appointed nine institutions to the committee, which will represent all creditors' interests during the reorganization.
June 21, 1999 - Bankruptcy may add value to Harnischfeger stock
Since Harnischfeger Industries Inc. filed for bankruptcy, its stock has gone up. any asset, even a share of a bankrupt company, is worth what someone will pay for it. Some people will that would not buy Harnischfeger stock before the filing are willing to purchase it now. They believe the bankruptcy added value
June 23, 1999 - Beloit Corp. employees eligible for federal funds.
Beloit employees laid off by Beloit corporation are entitled to federal funds for training and an an extension of unemployment benefits, U.S. Sen. Russ Feingold announced recently.
July 9, 1999 - Harnischfeger gets $20 million order
Harnischfeger received an order for two electric mining shovels, three rotary blasthole drills and a large LeTourneau wheel loader to Southern Peru Copper Corp., the largest mining company in Peru. This is the first major order since they declared Chapter 11.
July 12, 1999 - Harnischfeger's Grade tagged as the "Grave Digger"
A guest editorial in Barrons Magazine characterizes Jeffery Grade, CEO of Harnischfeger Industries as the "Grave digger of Harnischfeger" It points out misleading references and statements regarding his personal life, education, and military service. It reviews some of the risky ventures of Harnischfeger under his leadership that led to his company's bankruptcy. The article was a small print, four page, four column, closely spaced article that covered many negative aspects of Grade, his image and management style. The only conclusion one can come to after reading this article is "it did not have to happen" if a little common sense and even a small amount of good business management had prevailed.
July 15, 1999 - Harnischfeger uses "fad" decision technique
Harnischfeger has been using and and still uses, the tool - economic value added - to make strategic decisions. "Without this tool, said Dave Brukardt, Harnischfeger's spokesman, we might have been in bankruptcy sooner," he said. "It helped us slim up and skinny up our businesses" by shedding losing operations. Al Ehrbar, a senior vice president of a New York consulting firm that developed EVA, said he knew of no other company using the system that had gone bankrupt. He added that in Harnischfeger's case, the system might have been misused.
August 14, 1999 - Harnischfeger stock no bargain at any price
After Harnischfeger Industries Inc. declared Chapter 11, its stock fell to $1 a share. Many local investors started buying stock. They were certain that a company like Harnischfeger was bound to recover before the stock fell lower. "I wouldn't touch (Harnischfeger stock) with a 10-foot pole - it's worthless," said a senior New York managing director. His firm specializes in analyzing companies in bankruptcy and other special situations, and is affiliated with the Third Avenue Fund group.
August 21, 1999 - High risks put Harnischfeger in over their head
Associates and analysts say Jeff Grade took risks once too often and led his company into bankruptcy. Grade's suspicious military record, decisions like the take over of Giddings & Lewis Inc. and the failed $600 million deal to supply paper machines in Indonesia are all being looked at as "far out." Grade and most directors of the company did not return telephone calls last week. "His ego was immense - unbelievable," said a former executive who worked with Grade for more than decade. "No matter what you said to him, he would always top you. Anything. If you said you drank five glasses of water one day - he'd say he drank six." Beloit Corp., the papermaking machinery subsidiary that employs about 1,400 people in the Beloit area, appears to be the most vulnerable property, according to analysts.
August 22, 1999 - Foreign trade contributed to Harnischfeger bankruptcy
The sale of paper machines to a Singapore company that lacked a guarantee of payment is given much credit for for the problems of Harnischfeger and beloit Corporations. This is confirmed by former Beloit and Harnischfeger executive William Goessel, who retired as chairman of Harnischfeger in 1992 and was succeeded by Jeffrey T. Grade. "A decision like that goes right to the top," Goessel said. Grade, in a an interview after he resigned, said the Singapore contract was a mistake.
August 23, 1999 - Beloit union told Beloit Corporation may shutdown.
Union officials have been told that Beloit Corporation is considering a complete shutdown of manufacturing operations and that a decision will be made soon, perhaps this week. A management spokesman acknowledged that a meeting with union officials was held Friday, but declined to disclose the nature of talks. The spokesman said an announcement of company plans could come by the end of this week.
August 24, 1999 - The closing of Beloit Corporation, a major blow
Some quotes around town: Beloit City Council members and City Manager Jane Wood: Obviously it's not good news. Hugo Henry commented, " It's been a part of Beloit for a long time and it cuts right to the heart.'' Further, he said the possible loss of jobs for employees who are taxpayers, homeowners and a part of the community ``would be devastating.'' Council President Jerry Williams said he would not be surprised if the manufacturing portion of the Beloit plant closes down. ``We've seen it coming. I think it's really sad,'' Williams said. ``The impact on the city remains to be seen but it will impact a lot of families _ I feel for the people.'' Williams also added, however, ``I'm confident they will bounce back. They're a pretty highly skilled group.'' Thomas Clippert called a possible closing ``a big blow,'' for the community.
August 30, 1999 - Harnischfeger in serious trouble
Massive cost overruns on the Asian project, a down market, special installation and oversight contracts, management's inattention to their business because of their many problems, all contributed to Harnischfeger being in a deep hole which will be extremely difficult to dig out of.
September 1, 1999 - Work continues at Beloit-future unknown
Beloit Corp. Senior Vice President of Human Resources Dennis Winkleman said the company is still ``looking at a number of options'' for restructuring. Union workers xpecteded more layoffs or a complete shutdown of the Beloit and/or Rockton manufacturing facilities. Union and Harnischfeger officials met Aug. 20 but have not disclosed the nature of the talks.
September 2, 1999 - Dalton, MA "shocked" at plant closing
After announcing earlier that Beloit Jones would remain open, it came as a shook when Harnischfeger announced that the Dalton, MA plant is being shut down. After being reassured in February of 1998 the plant would not close, 258 workers lost their jobs.
September 8, 1999 - Big cutbacks at Beloit Corporation
Peter E. Rosenberg, director of corporate communications for Beloit Corp., announced the company will eliminate 350 union and non-union jobs in manufacturing, including closing the Blackhawk Plant in Rockton, and the Perform Pro Pipe Roll Shop in Beloit. ``It's very tough action that is happening here today,'' Rosenberg said as workers around the plant were informed of the news. ``It's a sad day.'' Another report said, "Floundering Beloit Corp. said Wednesday it will close all its manufacturing operations in Beloit and Rockton, Ill., costing about 350 workers their jobs by early next year."
September 10, 1999 - Union looks at buying Beloit Corporation
The union representing most of the 350 workers that the Beloit Corp. said this week it would let go says it is trying to help employees buy the company and another unit of its parent Harnischfeger Industries Inc. Representatives of the International Association of Machinists and Aerospace Workers said Thursday they had contacted Harnischfeger last month about buying Beloit Corp., which is its papermaking equipment manufacturing unit, and Joy Manufacturing, its underground mining equipment business.
September 12, 1999 - Jobs but a less money
If there is any bright side. it is that the economy is good and their are jobs to be had. The down side of this is the jobs available for laid off Beloit employees will be for less money. Beloit employees that earned $17 to $20 an hour may have to take jobs earning substantially less. Wages for unskilled workers are in the range of $8 per hour.
September 18, 1999 - First layoff notices go out
Peter Rosenberg, Corporate Communications, revealed the first set of lay off notices were sent out to Beloit Corporation workers this week. By law, Beloit Corp. has to give its employees 60 days notice before lay offs can begin. The notices were dated Sept. 14, giving employees until mid-November to work. Rosenberg said he did not know how many notices were sent out. About 350 employees, both union and non-union, are expected to lose their jobs before the end of the year.
September 22, 1999 - Workers that lost jobs get some help
State officials will meet today with representatives from Beloit, Rock County and neighboring communities in Illinois about the 350 Beloit Corporation employees who are expected to be laid off by the end of the year. Today's meeting comes at the request of Gov. Tommy Thompson, who is sending several of his cabinet members to ``access the needs and identify state resources that can help those in need,'' according to a press release sent to the Beloit Daily News
earlier this month.September 30, 1999 - Dalton, Jones workers march
Hundreds of UE Local 212 members and supporters (the "Reaper" among them) marched the four and a half miles from the Beloit-Jones plant in Dalton to Park Square here to give muscle to their demand that Harnischfeger Inc. delay plans to close the plant and work with the union and elected officials to keep the plant open. Workers say bosses lied to them about Harnischfeger’s plans to close the plant. "We worked 90-hour weeks this summer," said a crane operator who organized the march. "They said that if we showed a good value, they wouldn’t close us."
October 8, 1999 - Harnischfeger may sell Beloit Corporation
Beloit Corporation could be sold, according to Harnischfeger Industries Robert N. Dangremond, chief restructuring officer for the company, said the company has received ``several unsolicited indications of interest'' in the sale of Beloit Corp. Locally, Beloit Corp. Director of Corporate Communications Peter Rosenberg said he could not release the list of interested companies and would not say if the local union was one of the parties.
October 9, 1999 - Union puts together bid to purchase Beloit
A representative of the International Association of Machinists and Aerospace Workers said the union is working with a New York investment firm to find out the feasibility of the purchase of Beloit Corporation.
October 27, 1999 - Harnischfeger working with potential buyers
Director of Corporate Communications Pete Rosenberg confirmed Tuesday that several interested businesses are still looking at buying Beloit Corp. and Joy Mining, both of which are owned by Harnischfeger Industries. ``Right now a number of different potential buyers are reviewing the assets of Beloit Corp.,'' Rosenberg said. ``We expect a decision in the next couple of weeks.''
November 1, 1999 - The Worst Stock on the S&P 500
Harnischfeger Industries clinched the 500th spot in early October--a distinction it was still holding well into December. The slump in Harnischfeger's markets alone can't account for a drop this big, especially when the business' cyclical nature was presumably built into the price in the first place. Another explanation may lie with CEO Jeff Grade--or with Wall Street's almost visceral dislike of him. Analysts complain that in the past two years Grade has made so many gaffes, false starts, and overly optimistic forecasts that they've basically thrown up their hands.
November 3, - 1999 Union makes offer for Beloit
The International Association of Machinists and Aerospace Workers (IAM) announced it has submitted a letter of intent to buy Beloit's assets. The union, working with KPS Special Situations Fund, L.P. and Pegasus Capital and Advisors L.P. of New York, submitted its offer of an undisclosed amount to Harnischfeger, parent company of Beloit Corp., early last week. Laurie Wicks and John McKay, both of whom have long histories with Beloit Corp., have been pegged as leaders of the company should the union and the two investment firms successfully buy Beloit Corp. from Harnischfeger Industries.
November 5, - 1999 Jeffery Grade hired as bankruptcy consultant.
The two-year deal, which includes a one-time payment of $15,000, was approved by the U.S. Bankruptcy Court in Delaware. Harnischfeger, the world's largest producer of mining equipment, also will rehire Grade's former lieutenant, Francis M. Corby Jr., at a rate of $1,500 a day with a $10,000 payment. This appointment was looked on by some with scorn and skepticism while some observers say Grade, known for his blond-dyed hair and flamboyant style, would help Harnischfeger by providing a reliable source of expertise. Other experts say Grade could serve as an important liaison between the company and big customers.
November 19, 1999 - Beloit Corporation closing down worldwide
Harnischfeger Industries Inc., which is seeking to reorganize financially, announced today that, in order to conserve cash, its Beloit Corp. subsidiary was scaling back its paper machinery group. Peter Rosenberg, Beloit' s director of corporate communications, said the Beloit paper machinery operations would include only parts, services and small-unit capital equipment as well portions of its tissue business. As part of the action, Harnischfeger said Beloit has discontinued funding its operations in the United Kingdom, Italy and Austria and accelerated previously announced closures of certain facilities in Wisconsin and Illinois. Rosenberg said that if the operations in the United Kingdom, Italy and Austria were to continue, they would have to be funded at the local level. Or, he said, they could be bought out.
November 19, 1999 - Another round of layoffs at Beloit
125 employees reporting to work for the last time. A local union bargaining unit member confirmed workers in Beloit and at Rockton's Blackhawk facility will be jobless by the end of the day. ``They'll come in, sign out, gather their tools and head to the unemployment office,'
November 20, 1999 - Beloit will close sooner than expected
Harnischfeger Industries announced Friday it is hastening efforts to shut down manufacturing in the Stateline Area. The company will announce the layoff time line in the next two weeks, Pete Rosenberg, Beloit Corp. director of corporate
communication, said Friday. In the meantime, the mammoth paper-making machine company has become solely a tissue machine producer, he said, also carrying on its maintenance business. That means Beloit Corp. is halting production of equipment for creating fine-grade paper, cardboard and news print. ``That focus has been reduced to tissue,'' he said. ``It's a major change.'' The paper-producing ventures have begun costing more than sales bring in, said Rosenberg, as Harnischfeger fields Beloit Corp. buy-out offers. And the focus on tissue-making machinery will bring even more local layoffs than expected.November 22, 1999 - Grade wants $5.7 million
Jeffery Grade, the former chairman and chief executive officer of Harnischfeger Industries Inc., has requested that a Bankruptcy Court judge allow his $5.7 million claim against the heavy machinery maker. Grade contends that Harnischfeger owes him the money under his severance agreement, his long-term compensation plan and a supplemental retirement plan. Grade, who became Harnischfeger's top executive in 1992, resigned under pressure in May, about two weeks before the firm filed for Chapter 11 bankruptcy protection.
December 1, 1999 - Beloit bidding extended by Harnischfeger
Harnischfeger Industries has extended the bidding process for Beloit Corporation well into December. The company can continue to extend the bidding process as long as the credit committee, which has been working with Harnischfeger since it filed for Chapter 11 bankruptcy protection in June, agrees to it. As of Tuesday, it appears Harnischfeger has pushed the bidding process into mid-December, according to Beloit
Corporation Director of Corporate Communications Pete Rosenberg. ``They have to balance that (the bidding process) with the funding of Beloit,'' he said. According to Rosenberg, the company is continuing to allow companies to tour the facility and look over Beloit Corporation's books in an attempt to sell the company.December 2, 1999 - 150 more lose jobs at Beloit
The company confirmed this morning as many as 150 salaried employees in various departments are in the process of being notified by mail that they will be losing their jobs. Beloit Corp. Director of Corporate Communications Pete Rosenberg said workers being let go are those in salaried and support services positions, including workers in engineering and sales in the Beloit plant and in the research and development facility in Rockton. ``We sent out 150 Warren Notices yesterday and anticipate sending out more in the near future,'' Rosenberg said.
December 3, 1999 - NYSE suspends Harnischfeger trading
NEW YORK, December 3, 1999-- The New York Stock Exchange announced today that trading in the common stock of Harnischfeger Industries, Inc. (the "Company")-- ticker symbol HPH -- will be suspended prior to the opening on Thursday, December 9, 1999, or such earlier date as i) the Company commences trading in another securities marketplace; ii) information is received that the Company does not meet the requirements of the other securities marketplace; or iii) the Company makes a material adverse news announcement. Following suspension, application will be made to the Securities and Exchange Commission to de-list the issue.
December 8, 1999 - Harnischfeger stock slumps to new low
Harnischfeger's stock slipped 6.25 cents a share Wednesday and now is worth 31.25 cents. That's about 97% less than its value a year ago and a nearly unfathomable distance from its high of $49 set in 1996. Yet Wednesday, traders on the NYSE floor dealt 3.7 million Harnischfeger shares. That followed trading highs of 5 million shares Tuesday and 4.2 million Monday. Since Friday, when the stock exchange announced Harnischfeger would be delisted after Wednesday's trading, nearly 15 million shares have changed hands.
December 9, 1999 - Harnischfeger reports $38 mil loss
The company's fourth-quarter showing comes after a $38.6 million loss in the third quarter and left Harnischfeger $18.5 million in the red -- 40 cents a share -- for the year. That compared with profits of $125 million a year earlier. The 12-month figures were helped by the sale of 80% of Harnischfeger's material handling division in April.
December 12, 1999 - Union will soon know top bidder
The union which represents workers at the Beloit Corp. hopes to learn next week whether it is the top bidder to purchase the firm from its parent company Harnischfeger Industries. Harnischfeger will accept bids for the sale of the company until Wednesday, said an attorney for the International Association of Machinists. The union representing manufacturing workers at Beloit Corp., with the financial help of New York-based KPS Special Situations Fund LP and Connecticut-based Pegasus Capital and Advisors LP, has submitted an undisclosed bid to buy Beloit Corp.
December 17, 1999 - Beloit sales near
Company officials announced today was the final day Harnischfeger will accept bids on part or all of Beloit Corp. The top bidder will be announced Wednesday, Dec. 22, according to Beloit Corp. Director of Corporate Communications Pete Rosenberg. Harnischfeger has also announced other key dates in the sale process, including a Jan. 10 auction for parts of Beloit Corp. Rosenberg said while the top bidder already will be announced, the auction will give other interested parties a chance to place counter-bids on Beloit Corp. or bid on other parts of the company. While Beloit Corp. is the overall name for Harnischfeger's pulp and paper-making group, the company has several other factories in the paper-making group, including Beloit Jones and Beloit Manhattan. All entities included in the Beloit Corp. group are up for auction. After the Jan. 10 auction, objections to the bids can be filed until Jan. 13. On Jan. 19, the bankruptcy court in Delaware will announce the final winning bids for Beloit Corp., and Harnischfeger expects to complete the sale by Jan. 30. ``At that point, Beloit Corp. will no longer be owned by Harnischfeger Industries,'' Rosenberg said, adding it will be up to the new owners of the company to decide the future of Beloit Corp.
December 18, 1999 - Union still hopefulThe union hoping to restore Beloit Corp. to a profitable company remains optimistic it will be the top bidder as Harnischfeger begins looking over offers from Friday. ``Harnischfeger has a substantial bid from the union, KPS and the Pegasus group,'' International Association of Machinists (IAM) spokesman Steve Sleigh said Friday afternoon. ``We feel that bid is in the best interest of the workers and people of Beloit and the Stateline Area.''
December 22, 1999 - Top bidder information delayed
Pete Rosenberg, director of corporate communications for Beloit Corp., said this morning he expects Harnischfeger to announce the delay ``because of the number and complexity of the bids were more than they expected.'' The company closed the bidding for Beloit Corp. last week, and Harnischfeger was scheduled to announce the top bidder today. An auction of all subsidiaries of Beloit Corp., including Beloit Jones and Beloit Manhattan, is expected to take place Jan. 10, and the results of the auction and top bidders on all parts of Beloit Corp. will be announced Jan. 19. The final sale of Beloit Corp. is expected by Jan. 30.
December 23 1999 - Bid delay official
In a prepared statement, Harnischfeger president Mark E. Readinger said the top bidder for the company will be announced next week, delaying the process after the original announcement was anticipated Wednesday. ``The Beloit sale process is continuing as expected. We received the first round of bids last Friday, Dec. 17, by those companies who wanted to be considered as a preferred or `stalking horse' bidder. We are encouraged by the number and quality of the bids so far, but it has presented us with an extra administrative burden to properly evaluate and clarify all the bids,'' Readinger wrote. ``We had expected this evaluation to be completed this week, but given the number and complexity of the bids, we now expect to identify the stalking horse bidders by mid-week next week. The overall message is, so far so good,'' he concluded.
December 30, 1999 - Another delay in top bidder
Harnischfeger Industries, parent company of Beloit Corp., was expected to announce this week who placed the top bid for the company, which has been for sale for several months. The announcement was originally to be made at the beginning of last week, but because of the number and complexity of the bids, Harnischfeger Chief Executive Officer Mark Readinger said more time was needed to look over the bids. In a faxed statement, Readinger said he expected to make the announcement this week by mid-week. Pete Rosenberg, who was employed by Beloit Corp. as director of corporate communications, said because of the holiday week and several scheduled vacations, he did not expect an announcement to be made this week. In addition, Rosenberg noted Wednesday was his last day with the company. The person who questions are now being directed to, Brian Brunner, is on vacation this week.
This series of articles is authored by: Luigi Bagnato, retired from Beloit in 1989 after 29 years of service.
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