International Harvester Co. officials said today they believe they have put into place a financial and management framework that will enable the beleaguered company to stay alive for at least the next few months.
But the officials, in their first meeting with reporters in several months, said that an unexpected drop in the company's markets for trucks or farm equipment could still force IH to file for protection under Chapter 11 of the federal bankruptcy code.
"We believe we have a plan that keeps us viable," said IH President Donald D. Lennox. He added, however, "Chapter 11 will be a threat for us for some time.
"Obviously if what appears to be an economic recovery is aborted and we sink into depression," Lennox said, "we'll have a problem."
Harvester has said it expects to lose $1.5 billion in the year that ended Oct. 31.
At a board meeting Monday Harvester's directors put the finishing touches on a debt refinancing package that analysts say should keep the company's lenders at arm's length at least until the early part of next year.
The package includes the conversion of some of the company's debt into equity to be held by lenders. Part of the conversion is predicated on Harvester convincing suppliers to make concessions. Harvester officials said today it appeared that the company would exceed by several million dollars its goal of $50 million in supplier concessions.
Lennox said the company's prospects had been brightened by "the tremendous support, and I would even term it a vote of confidence" that Harvester has received from suppliers and other "constituencies."
At the Monday meeting the board also gave Lennox the additional title of chief executive officer, beginning a transition from the financially oriented management that was installed last May to a more operational management team. Lewis W. Menk, who had been chief executive officer, will remain as chairman, and William G. Karnes will stay on as chairman of the Harvester board's finance committee.
Menk and Karnes, long-time mainstays of the Chicago business and financial community, were brought in by the board last May to make slashing cuts in IH's operations and to secure new financing to keep the venerable company afloat.
After hinting that the board had discussed and rejected a bankruptcy filing at Monday's meeting, Lennox said that a Chapter 11 filing "is always a possibility, but that is strictly, truly, a function of how well the market improves."
Asked if markets were improving, Lennox said, "sorry you asked." He then laughed and added, "actually, we do see some activity picking up in the truck business." But Lennox said the company's farm equipment business is still a problem area.
Lennox said the company had been shrunken in recent months to a point where it can survive with markets at their current depressed levels.
"Our operating plan, we believe, is conservative in that we are not projecting any significant change in the marketplace for 1983," he said. "We are not waiting for the markets to turn around, which I think was a mistake of the past."
Although Harvester officials downplayed the significance of the management changes, they said the moves were an attempt to begin a line of succession in the company's management.
Lennox's administration will probably not be a long one. Lennox, 63, said he expects to remain as chief executive for no more than three years and wants to develop one or two possible successors from within the company's management ranks.