Kaiser’s Coal Divisions File for Chapter 11

Kaiser Steel, the troubled steel fabricator that filed for bankruptcy protection last Wednesday, said its coal subsidiaries also filed Friday in Denver for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.

Kaiser said it is still looking for a buyer for the five coal companies, which together control 1.3 billion tons of low-sulfur bituminous coal in Utah, New Mexico and Colorado. The coal operations earned $9.8 million in the first nine months of 1986.

Kaiser Steel is known to Southern Californians for the steel mill it operated at Fontana until 1983. Most of the company’s 5,000 retirees live in Southern California.

Two weeks ago, the cash-short firm ended medical benefits for its retirees and 1,000 employees. The bankruptcy filing places in jeopardy supplemental retirement benefits paid to workers who have taken early retirement. However, Kaiser Chairman Bruce Hendry said the “bulk” of the pension benefits are insured by the federal Pension Benefit Guaranty Corp.

The subsidiaries that filed for bankruptcy protection Friday are Kaiser Coal Corp., Kaiser Coal Corp. of New Mexico, Kaiser Coal Corp. of York Canyon, Kaiser Coal Corp. of Utah and Kaiser Coal Corp. of Sunnyside. Hendry said Kaiser is compiling a list of assets and liabilities for the coal companies. He said he could not identify the largest creditors.

Kaiser Steel, based in Colorado Springs, Colo., said it plans to use the proceeds from a sale of the coal companies to help finance development of an industrial park.