MLO, Oglebay Norton impacted by soft demand for product
The slow economy is having an impact on one of Presque Isle County?s largest employers, Michigan Limestone Operations Inc. Demand for limestone has dropped off significantly over the last year, according to MLO president Mike Skinner, and measures have been taken to improve the bottom line throughout the company. ?We?re cutting back hours,? said Skinner. ?What we?re trying to do more often than not is to take a week shutdown at a time.?
There have been two shutdown weeks in Rogers City this season; the first was in June, while the other was last week. ?It?s certainly been a trying year,? Skinner said Monday in a telephone interview. Overall, limestone shipments are below the five year average on the Great Lakes. At the MLO plants in Rogers City, Cedarville and Gulliver, limestone shipments are down about three million tons ? from 18 million to 15 million this year.
?THE WEATHER has affected it,? Skinner explained. ?The construction aggregate industry has affected it ? steel has dropped off again this year. It was going strong at the end of last year, and of course this year with the way the economy is, it?s dropped back off.? ?We?ve been through worse years ? I don?t want to say this is doom and gloom ? but it?s just one of those years where things are all down.?
Parent company Oglebay Norton?s stock hovered at less than $2 a share late last week, compared to $35 a share in 1998. Earlier this month, Oglebay Norton’s Mike Lundin (formerly of the Calcite operation) commented on flat second quarter earnings: ?Weak demand for the limestone and shipping services in Great Lakes minerals and for lawn and garden products in the southeast caused us to reduce production volumes and draw down inventories.? ?In addition, increased energy expenses and other costs further negatively impacted overall operating results,? Lundin stated in a company press release July 31.
SOME OF O-N?S customers have filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. However, company officials don?t expect these reorganizations to have a material impact on the company?s financial condition. Lundin said O-N is in negotiations with its syndicated bank group and senior note holders to amend credit agreements. ?We remain committed to the negotiations process and to finalizing a definitive long-term agreement,? Lundin said. The company has chosen to defer paying bond interest due on August 1, 2003, on its 10 percent, 2/1/09, senior subordinated notes.
?Although the company has the financial ability to make the interest payment, we have elected to take advantage of the 30-day grace period and defer payment un
REVENUES FOR the quarter were $116.5 million compared to $112.6 million in the year earlier period. Revenues for the six month period were $179.4 million compared to $174.9 million in the prior-year six-month period. ?We have undertaken a number of measures to contain costs and improve working capital, including inventory management,? Lundin said.
?We continue to seek strategic buyers for certain assets in order to permanently reduce our long-term debt.? O-N has engaged Harris Williams & Company, one of the largest, middle-market M&A firms in the country, to assist it in the asset sale process.