PITTSBURGH, FEB. 22 -- The chairman of Allegheny International Inc. says the company will be stronger after it emerges from bankruptcy reorganization because of the strength of its consumer products business.
The executive, Oliver S. Travers, said two of Allegheny International's subsidiaries, Sunbeam Corp. and Almet-Lawnlike Inc., are profitable and would not have had to file for reorganization were it not for the parent company's complex financial situation.
He said that including Almet-Lawnlike, Sunbeam's net worth -- its assets minus liabilities -- is about $400 million.
"Sunbeam is very healthy, as evidenced by its excellent results for the first four months of this fiscal year and by its strong backlog of orders," said Travers, chairman since 1986.
On Saturday, the Pittsburgh-based holding company and some of its subsidiaries filed Court for protection from its creditors while it reorganizes. Also included in the filing are Sunbeam Holdings Inc. and Chemetron Corp.
Greg Drahuschak, analyst for Butcher & Singer, said the filing was "no horrendous surprise."
"It's probably the best operating move they had, given their credit situation and the need they had for operating capital," he said. "This gets the banks off their backs for a while. Unfortunately, the sacrificial lamb in this process is the common shareholder."
Allegheny International has lined up fresh financing of $175 million from two major New York banks, Travers said. The credit line provides enough cash to run the companies during the reorganization, he said.
"Chapter 11 provides the means to implement corporate restructuring and continue the company's profitable turnaround," Travers said.
The bankruptcy court petition was a key to getting the additional money, said the company's chief operating officer, Thomas Albani.
While negotiations with the two banks occurred before the filing, the financing was made afterward. Legally, that puts the lenders in a "superpriority" position ahead of other creditors, Albani said.
The total liabilities of the company and its subsidiaries, which include such items as payroll and accounts payable as well as bank debt, are about $845 million. Its tangible assets are about $735 million.
Total debt alone for the parent company and its subsidiaries amounts to $525 million, of which $175 million is in short-term bank loans and $350 million is in various long-term commitments.
Allegheny International lost about $200 million from 1985 to 1987, largely due to debt incurred through a spree of acquisitions in prior years as well as heavy losses in real estate, gas and oil and credit operations.
Under a new management team since Robert Buckley resigned under pressure in 1986, the company has shed 19 subsidiaries and severely cut its corporate overhead.
The efforts bore fruit in the first quarter of fiscal 1988, which ended Dec. 31, 1987, when the company posted a profit of $7.25 million -- its first in two years.
Profits from consumer products amounted to $31.5 million in the quarter, compared with $19.2 million for the same period in 1986.
The filing does not affect Sunbeam Corp.'s consumer products operations in Canada, Mexico, Venezuela and Peru, according to the company. It also does not affect industrial and high technology companies that Allegheny International is in the process of divesting.
Allegheny International, prior to 1981, was known as Allegheny Ludlum Industries. The company acquired Sunbeam Corp. that year for $534 million.
Consumer products manufactured by Sunbeam includes small household appliances, electric blankets and barbeque grills. Almet-Lawnlite manufactures lawn and patio furniture.