Kokomo alloy maker files bankruptcy

INDIANAPOLIS -- Haynes International Inc., an 870-employee maker of industrial metal alloys, filed for bankruptcy protection Monday and said it had reached agreements with creditors and union employees in hopes of emerging from Chapter 11.\nThe 92-year-old company is trying to shake off a growing debt burden and dropping customer demand.\nHaynes said it expected to continue operating without interruption as it prepares a reorganization plan in hopes of exiting bankruptcy by year's end.\nHaynes, which made its bankruptcy filing in federal court in Indianapolis, operates its largest factory and has its headquarters about 40 miles to the north in Kokomo. In addition to that 440-employee 1-million-square-foot plant, Haynes operates a 117-worker factory in Arcadia, La., and a 37-worker plant in Openshaw, England. The rest of Haynes' workers are part of the company's international sales force.\nThe bankruptcy is not expected to lead to layoffs, Haynes spokesman Steven Goldberg said.\nThe company makes nickel and cobalt alloy sheets, tubes and bars sold to customers in the aerospace, chemical processing and gas turbine industries, among others.\nDemand for those products has been hurt recently by a weak economy and higher raw material and energy costs, the company said in a regulatory filing last month.\nIn its bankruptcy petition, Haynes listed $187 million in assets and $362 million in liabilities -- up from $235 million in liabilities listed in a regulatory filing last month for the quarter ended Dec. 31. The company reported a $4.3 million loss for that quarter on revenue of $46.6 million.\nA tentative agreement with bondholders would give them a 96 percent ownership stake in the privately held company in exchange for turning over their $140 million in bonds, the company said.\nHaynes also said its current majority owner, an investment banking firm called the Blackstone Group, had agreed to cancel that stake in exchange for the remaining 4 percent of equity.\nCongress Financial Corp. has agreed to provide Haynes $100 million in temporary financing during bankruptcy.\nHaynes also has reached a tentative deal with hourly workers represented by the United Steel Workers of America to extend their current contract through June 2007 and amend several terms.\n"This restructuring, once fully implemented, will allow Haynes to take full advantage of the fundamental strength of our business operations," said Francis Petro, Haynes' chief executive officer. "We will have a much improved balance sheet and a capital structure that is more appropriate for the business."\nThe company's customers and suppliers should experience no change in Haynes' business with them during bankruptcy, Petro said, and retirees' benefits will continue uninterrupted.\nThe company was started in 1912 in Kokomo as a maker of metal-cutting tools invented by Elwood Haynes, who also is generally credited with having produced one of the first gasoline-powered automobiles in the United States, according to the company's Web site. One of Haynes' alloy products was used on the nozzles of Apollo moon rockets.