The Beloit Chronicles - Part 4
January 1 to March 31, 2000
This is part four 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.
January 4, 2000 - Still waiting Beloit sale
Bob Dangremond, chief restructuring officer for Harnischfeger Industries, said a delay has been forced by the complexity of the bids. Until the sale is complete, the closure of both the Rockton and Beloit facilities will go forward. Several hundred of union and non-union employees have been laid off at Beloit Corp. in the last year, including 350 in September and an additional 230 workers in sales and engineering in early December. Manufacturing in both Rockton and Beloit was set to be completed by the end of December.
January 7, 2000 Valmet offers $160 mil for Beloit Corporation
An offer by the fiber and paper technology arm of the Finland-based Metso Corp. to purchase part of the Beloit Corp. will not preserve jobs at area plants, a competing bidder says. Valmet offered $160 million to purchase a large part of the Beloit Corp. from Harnischfeger Industries Inc. to acquire several of Beloit Corp.'s patents, said Mike Hornby, an attorney for the International Association of Machinists. "There has always been the speculation that if they are interested in Beloit Corp., it's to eliminate a competitor," Hornby said Thursday. Valmet, which has been a competitor of the Beloit pulp- and paper-machinery maker, said it wants to buy Beloit's roll cover division, paper-machine aftermarket business and related paper-machine technology.
January 7, 2000 -IAM Union bid not enough
The IAM learned Thursday it is not one of the top bidders for the company. Metso Corporation, a Finnish Corporation has offered Harnischfeger $160 million to buy some of the assets of Beloit Corp., and is one of five bidders. International Association of Machinists (IAM), the union that represents local Beloit Corp. manufacturing workers, has been working with two New York investment firms and acknowledged placing a bid with Harnischfeger when the bidding process took place last year. Thursday, IAM attorney Mike Hornby said if the union had been selected as one of the top bidders, it intended to return manufacturing to the Rockton plant. ``As far as I know, we placed the only bid that would re-open the (local) plants,'' Hornby said. He said the union does not believe Metso will return jobs to the Stateline Area, but is mostly interested in acquiring several of Beloit Corp.'s patents.
January 8, 2000 - Union hasn't given up
Despite the news that Valmet has secured top bid to buy parts of Beloit Corporation from Harnischfeger Industries at $ 160 million, the union remains optimistic at its chances of some day running the business. ``We've spent the last couple of hours trying to secure ourselves as the second high bidder. That way if the bankruptcy court should decide to not award Valmet the bid, it will go to the union,'' International Association of Machinists (IAM) spokesman Steve Sleigh said late Friday afternoon. Top bidders include: pulp and finishing divisions, Group Laperrier & Verreault Inc.; Woodyard Division, Andritz AG; OASIS, Alignment Services of North American, Inc.; Paper Aftermarket, Valmet (Metso) Corp.; and Paper Technology, Mitsubishi Heavy Industries, Inc. While the union was not the top bidder, Sleigh said it is familiar with Valmet because the company is one of the leading pulp and paper-making machinery manufacturers, and a major competitor of Beloit Corp. ``We have serious reservations as to what Valmet's purchase of Beloit Corp. would mean to our union members and the
people in the Beloit area,'' Sleigh said.January 11, 2000 - Valmet holds out hope for some ex-Beloit employees
Beloit Corporation employees are already having first contacts with staffers from Valmet. Representatives from the Finnish company that received bankruptcy court approval to purchase portions of Beloit Corp. are
interviewing local employees. The Valmet staffers are asking Beloit Corp. workers about their roles in the company and how the business operates, Beloit
Corp. workers told the Daily News. Interviews began last week and continue this week. On Tuesday the bankruptcy court approved Valmet's purchase of Beloit Corp. roll covering and after-market divisions. Valmet is mandated by law to produce a list of employees it intends to offer jobs when the company finalizes the sale, saidGlenn Ostle, Valmet vice president of marketing.
``We're just doing the preliminary work,'' he said. ``They're going around, talking to people, figuring out what we're buying.''January 12, 2000 - Union thinks Valmet will win
Unconfirmed rumors from the IAM offices feel Valmet has the winning bid
for Beloit Corp.'s paper machine and roll covering divisions. The International Association of Machinists and Aerospace Workers had joined with two financing companies to, first, bid for Beloit Corp., and, secondly, vie for a second place spot in the bidding game. The union was hoping to place themselves in line to gain the paper-making machine company started in Beloit if the Valmet offer faltered, said Mike Hornby, local IAM business representative. That opportunity may no longer be available. ``It looks quite certain the Valmet offer will go through,'' said Steve Sleigh, IAM director of strategic resources for international operations. Sleigh added the bid winner has not yet been officially announced.January 13, 2000 - Five winning bidders announced
The Milwaukee-based Harnischfeger, one of the world's top producers of machinery for mining and papermaking, announced the five winning bidders are: Groupe Laperriere & Verreault Inc., for the Pulp and Finishing Divisions, RCI Acquistion Inc., for the Woodyard Division, O&OC Acquisition Co., for OASIS, Valmet Corp., for Paper Aftermarket and Roll Covers Division and Mitsubishi Heavy Industries Inc., for Paper Technology. A hearing before the U.S. Bankruptcy Court to approve the bids is set for Jan. 19, Dangremond said. Winning bids are scheduled to be approved at a Jan. 19 hearing before the Bankruptcy Court, Harnischfeger said in a written statement.
January 13, 2000 - U.S. representatives question legality of Beloit bidder
While the union that was hoping to buy Beloit Corp. has questioned if the antitrust officials will allow Valmet's purchase of the company to go through, congressmen from both Wisconsin and Illinois have come forward to question the legality of the
purchase. U.S. Reps. Paul Ryan (R-Wis.) and Don Manzullo (R-Ill.) recently sent a letter to Attorney General Janet Reno. In their letter, Ryan and Manzullo point out that a competing bid made by KPS Special Situations Fund and Pegasus Capital and
Advisors ``would likely lead to the retention of nearly 600 local jobs in Beloit, Wis., and Rockton, Ill. Of similar importance are the serious antitrust concerns that have been made in recent news accounts with regard to Metso Corp.'s global market share of paper-making machinery.''January 16, 2000 Concerns about Valmet monopoly
Beloit and Wisconsin State officials and representatives meet Thursday with U.S. Department of Justice personnel, as the DOJ reviews the case with an eye on monopolistic concerns. Beloit City Manager Jane Wood, city council President Jerry Williams, state Sen. Judy Robson, state Rep. Dan Schooff and others charge the Valmet sale will violate antitrust laws. ``This acquisition has the potential to seriously damage competition in the paper industry machinery business,'' U.S. Sen. Herb Kohl said in a news release. ``Beloit Corporation and Valmet are direct competitors and two of the three top paper-making machinery manufacturers in the world.'' `Without the patent protections and intellectual property and the service department,'' a step-in manufacturer cannot succeed, said Steve Sleigh, International Association of Machinists director of strategic resources for international operations, in
Washington, D.C.January 20, 2000 - Valmet confident of bid position
``We're very confident our bid is going to be approved, it's been extended until next week, but I really don't have an explanation why other than this is an ongoing process,'' Valmet Vice President of Marketing Glen Ostle said from his office in Charlotte, N.C. ``Everybody wants to know what is going on,'' Ostle said. ``Right now it's hard for us to say anything.'' Ostle and Valmet officials will not speculate on the future of Beloit Corp. until the sale is complete. Ostle said he does not expect the sale to be complete for up to six months.
January 25, 2000 - Legislatures try to retain Beloit jobs
State Sen. Judy Robson, D-Beloit, and Rep. Dan Schooff, D-Beloit, met with City Manager Jane Wood and members of the Beloit City Council Monday. A major concern was the fate of Beloit Corp. The representatives discussed traveling to Washington, D.C., to talk to federal officials about not allowing Valmet to buy Beloit Corp. Beloit Corp. and Valmet are two of the top three pulp and paper-making machinery manufacturers in the world. Some, including Wood, Robson and Schooff believe if Valmet is allowed to buy the local company, the sale will create a monopoly in the industry. U.S. Rep. Paul Ryan, R-Janesville, and Wisconsin's U.S. Sen. Herb Kohl also have been working with Beloit officials on the issues.
January 25, 2000 - Storm delays Beloit/Harnischfeger progress
A bad winter storm with high winds , blowing snow and cold weather have closed down much of the northeast, including the Maryland bankruptcy court where Judge Peter Walsh is deciding if Beloit Corp. will be sold to its competitor Valmet. Valmet Vice President of Marketing Glen Ostle said this morning all government offices in the Washington, D.C. area,including the bankruptcy court, are closed for the second day in a row because of the snow storm. Beloit, local officials still hope Judge Walsh will consider letting the union representing workers at Beloit Corp.buy the assets rather than Valmet.
January 27, 2000 - Local and state lawmakers still battle Valmet buyout
State Rep. Dan Schooff, D-Beloit, and Sen. Judy Robson, D-Beloit, are hoping to meet with Attorney General Janet Reno to block sale of Beloit Corp. to Valmet. Schooff, Robson and State Senate Majority Leader Chuck Chvala sent a letter to Reno expressing concern about possible anti-trust law violations if Valmet purchases Beloit Corp. An earlier letter was sent by U.S. Reps. Paul Ryan, R-Wisconsin, and Don Manzullo, R-Illinois.
January 28, 2000 - Storm further delays buyout decision
Continued bad weather and a busy court calendar re causing further delay the Harnischfeger bankruptcy process. Harnischfeger was originally scheduled to be in court for the sale process last week. Due to complex issues the case was continued to earlier this week. Blizzards in he jurisdiction area caused the federal government to close down for several days this week, causing even more of a delay in the court proceedings.
February 3, 2000 - Beloit slowly disappears as viable company
Harnischfeger Industries' Chief Restructuring Officer Bob Dangremond said OASIS will be sold to Alignment Services of North America, Inc., and Woodyard Division will be sold to Andritz AG. The sale of two other beloit entity, the Paper Aftermarket and Roll Covers Division located in Beloit and Rockton are being reviewed by the bankruptcy judge next week. Another Beloit Corp. Division, Paper Technology is due for a hearing in court. Mitsubishi Heavy Industries, Inc., which owns 20 percent of Beloit Corp.'s stock, was the top bidder for Beloit's Paper Technology Division.
February 9, 2000 - Judge approves sale of Beloit divisions.
U.S. District Judge Peter Walsh of Delaware gave his approval for the sale of the three final pieces of Beloit Corp. by its parent Harnischfeger Industries Inc., with one to go to a longtime Beloit competitor, Valmet which includes the paper aftermarket and roll covers division of Beloit if the deal passes review by antitrust officials. Walsh also approved the sale of Beloit technology for papermaking equipment to Mitsubishi Heavy Industries and the other buyers of Beloit. In addition, the judge approved a deal in which Groupe Laperriere & Verreault Inc. of Montreal bought the pulp and finishing units of Beloit.
February 10, 2000 - Beloit employees feel let down.
After reading that a Harnischfeger official said funding shortfalls are behind the move to rescind employee severance pay, four Beloit Corp. workers came forward, charging the bankruptcy court awarded generous retainer fees to some Harnischfeger consultants and more local corporate officials will receive severance packages. The fact that former Beloit Corp. Asia Pacific Vice President Chi Yu was awarded $175,000 and $8,156 per month, plus housing and health benefits, to serve as a consultant and the court awarded former Beloit Corp. Asia Pacific Executive Vice President Larry Swift $275,000, plus $17,083 per month did not sit well with Beloit employees who are losing their jobs and severance pay. They were especially incensed to see former Harnischfeger Chair Jeffery Grade rehired as a consultant and paid a one-time sum of $15,000, plus $2,500 per day for consulting services. Grade has been linked to damaging decisions at Harnischfeger such as forging a paper machine sale in Asia, without gaining guarantee of payment. Beloit Corp. lost hundreds of millions of dollars when the Asian economies crashed and the orders were canceled.
February 10, 200 - Harnischfeger seeks $225 million loan
Harnischfeger Industries Inc. said Tuesday it and Chase Manhattan Corp. are working out a deal to arrange a $225 million secured term loan and to amend the company's existing $500 million revolving credit agreement. The move will give them more liquidity and flexibility in its finances, said David Brukardt, a Harnischfeger spokesman. The company said the amendment to its revolving credit agreement is to provide lenders with collateral and new financial covenants. Brukardt said the collateral terms were not yet set, but could take the form of plants, equipment and inventory. He also said the company has not disclosed the interest rate for the new loan.February 16, 200 - DOJ officials to meet with Beloit officials
U.S. Department of Justice personnel will meet Thursday to discuss antitrust concerns over the purchase of part of the Beloit Corp. by a competitor. Valmet Corp., a division of Metso Corp. of Finland, is purchasing Beloit Corp.'s paper aftermarket and roll covers division. Some local leaders contend the sale would violate antitrust laws. "This acquisition has the potential to seriously damage competition in the paper industry machinery business," U.S. Sen. Herb Kohl said in a news release. "Beloit Corporation and Valmet are direct competitors and two of the three top paper-making machinery manufacturers in the world." Kohl, D-Wis., said the acquisition would give Metso a high market share in the industry. Valmet officials say the purchase, which a bankruptcy judge approved, does not raise antitrust issues.
February 17, 2000 - Beloit employees file labor complaints.
Up until November, employees expected they would receive severance pay up to six months of their salary. Many learned in Mid November and early December they would not receive severance pay due. Some Beloit workers have begun submitting labor standards complaints with the Department of Workforce Development. After working many years at Beloit and entitled to severance pay, Employees charge that Harnischfeger arbitrarily changed the rules for them while paying some individuals high consulting fees and awards
February 18, 2000 - Second phase of Valmet purchase investigation.
It is reported by the Department of Justice, that after conducting a series of depositions of key paper industry players, the investigation has moved into a second phase. Although there are no assurances the DOJ will block the Valmet sale, the extended investigation is looked on by Beloit City officials and IAM union people as encouraging.
February 18 - Union says fill out ``Proof of Claim'' forms
Harnischfeger's bankruptcy may bring no changes or a loss of up to 25 percent of local pensions, Kilpatrick said. IAM officials state the 25 percent drop is a ``worst case scenario.'' The union encourages Beloit Corporation retirees to fill out he ``Proof of Claim'' form sent from the bankruptcy court in Delaware.
February 19, 2000 - Valmet purchase could make monopoly
The purchase of Beloit by Valmet would give the Finnish company 91 percent of the U.S. premium quality tissue-making machine production. It is reported that the Department of Justice believes sale of Beloit Corporation to Valmet could create a monopoly, and will examine a second bid by union members and capital-investment partners.
February 19, 2000 - Nashua lays off 60 to 90 people
Reports are the Beloit Division located in Nashua, NH could eliminate 60 to 90 of the company's 450 workers in the next few months as the new owner seeks to "lower the overhead." Marc Gendreau, vice president of human resources, said the job cuts are part of a plan agreed to by the new owners. Workers reportedly were given a week's pay for each year they have worked for the company.
February 21. 2000 Valmet will keep some jobs in Beloit
Valmet Corp., the company bidding $160 million to purchase part of Beloit Corp.'s assets from Harnischfeger, announced today it is working to secure about 300 Beloit Corp. workers and find another, smaller location in Beloit to continue the Valmet's after-sales service area.
February 22, 2000 - US Justice Department to discuss Valmet acquisition
U.S. Justice Department personnel will meet today to discuss antitrust concerns over the purchase of part of the Beloit Corp. by a competitor. "This acquisition has the potential to seriously damage competition in the paper industry machinery business," Sen. Herb Kohl (D-Wis.) said in a news release. "Beloit Corp. and Valmet are direct competitors and two of the three top papermaking machinery manufacturers in the world."
February 23, 2000 - Beloit/Valmet deal may be delayed by Anti-trust discussion
Although Valmet officials have said the purchase of Beloit Corporation, which was approved by a bankruptcy judge, does not raise antitrust concerns, the Justice Department has entered a phase two review of the anti-trust concerns expressed by Beloit and Wisconsin officials. This part of the investigation may cause further delays of the Department of Justice decision in this matter.
February 23, 2000 - Valmet concerns about time frame
Valmet would like to retain about 300 Beloit employees to remain in the Beloit locality. They have concerns that time may be a factor and that many of the former Beloit employees could find work in other areas before they have the opportunity to interview and retain a core group of Beloit employees.
February 24, 2000 - Harnischfeger to cancel dividend
Valmet Harnischfeger would said Tuesday it won't pay a dividend this quarter and is negotiating with l with Chase Manhattan Corp. for a $225 million secured term loan. Both of theses moves were praised by financial industry analysts. "This is a good indication that they are now coming to grips with the severity of their problems," said Joel Tiss, an analyst with Lehman Brothers in New York. "I was much more concerned when they were acting nonchalant about their problems."February 25, 2000 - Beloit to lay off 150 more
Beloit Corp. will cut 150 more jobs by September in Beloit and nearby Rockton, Ill., as part of a previously announced restructuring, the firm said Wednesday. The terminations, most of them expected to be permanent, follow some 350 job cuts made over the last several months. Taken together, the cuts will trim the company's Beloit-area work force, which stood at 1,700 to 1,800 a year ago, by more than a fourth.February 28, 2000 - Harnischfeger to receive $135 million settlement
Asia Pulp and Paper Co. Ltd. says it has agreed to settle a lawsuit with bankrupt Harnischfeger Industries Inc. regarding two paper making machines its Beloit Corp. made for APP. The deal, according to a statement released in Singapore by APP, would pay Harnischfeger $135 million while APP would receive the two machines, with both going to its PT Indah Kiat Pulp & Paper unit. Harnischfeger said it would not comment on the deal because all the documents had not been signed.
February 29, 2000 - Employees offered severance pacage
In a letter dated Feb. 22 Beloit Corp. President and CEO Mark Readinger wrote, ``I am pleased to extend this offer of continuing employment to you on behalf of Beloit's Projects Group.'' The offer includes staying on with the diminishing company until May 1, with the promise of one week of severance pay per each employee year at the company. The employees who received the letters were promised up to 26 weeks or six months of severance pay, as well as extended health coverage.
March 3, 2000 - Three ex-Beloit employees testify
John Petersons and Roger Niman of Beloit and Dennis Coleman of Janesville, all Beloit Corp. workers have received notices their jobs are ending and the company will not deliver their severance pay testified in support of a bill that would ensure worker's pay comes before banking matters when a company closes or heads into bankruptcy court. Beloit workers have said the severance equals $20,000 for many and up to $40,000, not including extended health benefits.
March 3, 2000 - Harn signs agreement with Asia Pulp & PaperHarnischfeger Industries Inc. said Friday an agreement had been signed with Asia Pulp and Paper Co. Ltd. over payment for two paper making machines its Beloit Corp. subsidiary produced for an APP subsidiary. It was reported the settlement calls for APP to pay $135 million to Beloit and for the release of $16 million that Harnischfeger deposited with a bank concerning related letters of credit. Also as part of the settlement, Beloit is to retain a $46 million down payment it received from APP for the two machines.
March 4, 2000 - Beloit customer: "How can they self-destruct in a couple years?"
A Beloit customer that ordered a $45 million dollar paper-making machine from the now-defunct Beloit Corp. in 1998 is still awaiting its arrival, company officials said. Inland Empire, of Washington state, ordered the machine from Beloit Corp. to double its paper-making capacity, said Robert Sallee, Inland expansion project manager. Two years ago, if you would have told us this would have happened to Beloit (Corp.), I would have laughed," Sallee said. "How they can self-destruct in a couple of years is almost beyond comprehension."
March 10, 2000 - New Beloit company formed
Ex Beloit Corp. Senior Vice President of Marketing and Development Laurie Wicks and three other former Beloit workers formed a new company named Paperchine, LLC with Wicks serving as president. The new company expect to employee over 40 workers. ``We've been moving extremely quickly,'' Wicks, 54, said. ``Actually, quicker than we anticipated.'' Larry Voss is the only former Beloit worker named. Wicks declined to name the men, stating they still work for Beloit Corp. Voss had been in charge of the Beloit Corp. accounting department. Wicks left Beloit Corp. in the mid-1990s, after 36 years. Paperchine has 12 orders with other calls coming in.
March 13, 2000 - Harnischfeger makes another severance offer.
100 workers have received yet another severance pay offer. The offer applies to workers newly assigned to the ``rescaled paper group,'' according to a letter issued by Beloit Corporation. The decision to assign you to the rescaled paper group was made based on the company's recent definition of the group and the role your position and/or expertise will play in supporting it,'' according to a letter signed by Duke Sims, senior vice president of the Beloit Corp. paper group. ``By definition, this group consists of those rescaled portions of the aftermarket business deemed to be most important to
furthering Beloit Corporation's strategic interests as they relate to the impending sale,'' the letter reads.March 14 - Beloit workers receive another offer of severance pay
About 100 workers remaining at the Beloit Corporation are considering another severance pay offer - apparently designed to tide them over until the service divisions and patents of the paper machine manufacturer are purchased by Valmet.The offer applies to workers newly assigned to the "rescaled paper group," according to a letter issued by Beloit Corp. and obtained by the Beloit Daily News." The decision to assign you to the rescaled paper group was made based on the company's recent definition of the group and the role your position and/or expertise will play in supporting it," according to the letter signed by Duke Sims, senior vice president of the Beloit Corp. paper group. That group, the letter continues, "consists of those rescaled portions of the aftermarket business deemed to be most important to furthering Beloit Corporation's strategic interests as they relate to the impending sale."
March 22, 2000 - Harnischfeger says bankruptcy costly
Harnischfeger reported a loss of $17.5 million in the quarter ending Jan. 31, according to documents filed with the Securities and Exchange Commission. The loss is about $16 million more than Harnischfeger lost in the same quarter last year. Without restructuring and bankruptcy expenses, the company would have "about broken even," said Kenneth Hiltz, Harnischfeger chief financial officer. The company took a one-time charge of $6.3 million for closing part of its Joy Manufacturing operations in England. Harnischfeger also had nearly $11.6 million in bankruptcy reorganization charges, including $7.8 million in attorney's fees and related charges.
March 28, 2000 - Beloit Corp. building sale postponed
The sale of local Beloit Corp. buildings has been put on hold, pending completion of a U.S. Department of Justice antitrust review of plans to sell portions of the company to competitor Valmet. The company's 12-building complex has attracted the attention of other businesses and the city of Beloit. The owners of Paperchine, a start-up paper-machine servicing company are interested in a portion of the Beloit Corp. buildings. Paperchine could easily start service and limited manufacturing in the Beloit Corp. MillPro quarters, which is already set up for those functions, Paperchine President Laurie Wicks said.
This series of articles is authored by: Luigi Bagnato, retired from Beloit in 1989 after 29 years of service.
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