Lockheed Aircraft Corp, directors reported earlier this year that the company's questionable overseas payments totaled between $30 and $38 million. Incorrect figures were printed in yesterday's editions.
Lockheed Aircraft Corp., which only 18 months ago faced potential collapse in the wake of international payoff scandals and its own financial weakness, yesterday announced an agreement with 24 banks to remove federal guarantees on all loans to the California-based aerospace giant.
Moreover, retiring Lockheed chairman Robert W. Haack revealed yesterday that the controversial program of government-backed loans to his company since 1971 actually resulted in profits of some $30 million to the U.S. government.
"It's a great day, one we've been striving for," said Haack. He is a resident of suburban Potomac, Md., and a former president of the New York Stock Exchange.
Installed about 20 months ago to replace ousted Lockheed chairman Daniel Haighton, Haack has been credited with helping to restore the company's creditability after a series of damaging disclosures about questionable and illegal overseas payments related primarily to aircraft contracts.
Altogether, according to a report by Lockheed directors earlier this year, the company spent between $30 and $38,000,000,000 for questionable purposes in the early 1970s. Revelations about specific payments by Lockheed led to political turmoil in Japan and investigations in the Netherlands, West Germany, Italy and other nations.
In 1971, Lockheed was the nation's No. 1 defense contractor, but several of its government projects developed embarrassing cost overruns and other problems. Commercial banks told the company it could have no additional loans unless there was a firm guarantee that $400 million already owed would be repaid.
By a margin of four votes, Congress decided that Lockheed's survival was vital to the national interest and established an Emergency Loan Guarantee Board with authority to guarantee repayment for up to $250 million of loans by banks to the firm.
Lockheed soon borrowed nearly $650 million from commercial banks with $245 million guaranteed by the taxpayers. From that low point through this year, Lockheed gradually repaid loans backed by the government as sales and profitability were restored. Today, $60 million of bank loans to Lockheed are backed by government guarantees. In the first six months of 1977, Lockheed had profits of $26 million on sales of $1.7 billion.
According to the announcement yesterday, made on the eve of both the first regular Lockheed stockholders' meeting in several years and Haack's departure as board chairman, banks no longer will require federal loan backing because of the improved financial condition at the firm. Lockheed employs 55,000 persons.
In a telephone interview from his headquarters at Burbank, Calif., Haack said the federal loan board will meet here on Oct. 12 to review Lockheed's situation and presumably sever the firm's financial relationship with the U.S. Treasury.
"There has been a cloud around Lockheed here and worldwide," he said. "We have, for some time, looked like a ward of the government and it impeded some of our marketing efforts. 'If you're as good as you say then why do you have government guarantees.' some have said," Haack recalled yesterday.
The new bank agreement, Haack added, "will be persuasive to customers by saying Lockheed is a viable corporation and it can now fly alone."
Specifically, Lockheed's 24 banks agreed to extend a revolving bank credit line of $100 million to Lockheed to replace the existing line of $250 million in government guaranteed funds. An outstanding $350 million, long term loan, will be retained through 1981.
According to Lockheed and government officials, the federal loan guarantees did not require any taxpayers' money. After all expenses associated with the aid, the government ended up with about $30 million extra - from the government's share of interest charges and fees on the banks loans. Throughout, the federal government held priority liens on Lockheed property.
Lockheed was a subject of continuous government oversight in traditional private enterprise decision making during the guarantee period. Haack said yesterday that federal officials had to approve new projects and financing agreements, for example.
Haack will be replaced today as chairman by Roy A. Anderson, following a management plan approved by directors in August. Haack will remain on Lockheed's board. He is a derector of seven other companies.
He said he planned to spend more time at his home in the Washington suburbs. Haack predicted that an agreement with the Securities and Exchange Commission will be reached in the near future, permitting that agency to study all information in Lockheed's possession about questionable overseas payments - but without further public disclosure.