The new chairman of International Harvester Co. said today that a planned restructuring of the financially troubled maker of tractors and trucks could include the disposal of its construction equipment division.
Louis W. Menk said in his first meeting with the press since assuming the chairmanship of the Chicago-based company a month ago that the division is "a problem we're looking at right now to see if we can make it viable."
Analysts have speculated for several months that Harvester's construction-equipment operation would have to be sold or liquidated if the company is to have a chance of regaining its financial health.
Menk said Harvester hopes to take action on the division by July as part of a reworking of the company's financial bailout package. He gave no other details.
Harvester, which has lost nearly $500 million in the first half of its current fiscal year, is operating under a $4.2 billion financial bailout package negotiated with its banks late last year. It recently asked its lenders to renegotiate that package, just four months after it went into effect, but Menk said today that he does not expect the new pact to require any additional loans.
Despite recurrent rumors in financial markets in recent days that Harvester is on the verge of filing for protection from its creditors under Chapter XI of the federal bankruptcy law, Menk insisted that the company's plight is not that severe.
"I think the phrase 'extremely critical' is too strong," he said. "Our cash is in shape to be viable until the end of the fiscal year," which ends Oct. 31.
"We are not out of the woods," Menk said. "Any junior high school student would know we have serious problems. The chances of going into Chapter XI are there. I am not willing to put a percentage on it. We are going to work like hell to see that does not happen.
"Plans indicate improvement in our cash situation," he added, "but I am not prepared at this time to say when we will return to profitability."
Menk, the former chairman of Burlington Northern Inc., replaced Archie R. McCardell as Harvester chairman on May 3, and many predicted he would oversee a break-up or bankruptcy of the company.
But Menk said, "I want to emphasize that I don't consider myself a caretaker manager. I am active in restoring the company to profitability."
"With the agricultural market what it is today, with the farmer in the position he is in today, with the truck situation since deregulation, I don't think anybody can predict anything with any certainty," he said.