Keystone Consolidated Industries files for Chapter 11

By Jeff Pines

Washington, Feb. 26 - Keystone Consolidated Industries, Inc. filed for Chapter 11 on Feb. 26, according to a filing with the U.S. Bankruptcy Court for the Eastern District of Wisconsin.

Limited liquidity coupled with rapidly escalating costs forced the company into Chapter 11, it said, adding it had been trying restructure itself outside of court for the last two years.

Keystone estimates it has more than 1,000 creditors, assets of $196.95 million and $365.3 million of debt.

The company lists Philip Metal Corp. as its largest unsecured creditor with a trade claim of $7.42 million. Triumph Capital CBO I, Ltd. is the second largest creditor with $6.65 million of 6% subordinated unsecured notes due 2011. It is followed by the Bank of New York with a $6.15 million claim for 9 5/8% senior unsecured notes due 2007.

In its most recent 10-Q, the company noted it was not in compliance with certain financial covenants in its primary revolver.

To restore its liquidity, the company is seeking approval for $60 million debtor-in-possession financing facilities, which includes $55 million from Congress Financial Corp. and $5 million from EWP Financial LLC. EWP is a wholly-owned subsidiary of Contran Corp., which is Keystone's biggest shareholder. As of Sept. 30, Contran controlled about a 50% stake.

Keystone cited the costs of medical benefits for its workers and retirees as contributing to its financial problems. It wants "substantial" reductions in medical costs by changing plan coverages and premiums.

The company believes that if it can get these concessions along with restructuring its debt that it can emerge from Chapter 11 and successfully compete. It has no projected date for emerging from Chapter 11, but said it intends to move as quickly as possible through the process.

Keystone manufactures and distributes fencing and wire products.

The Chapter 11 case number is 04-22422

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