ALLIS-CHALMERS <AH> FILES FOR CHAPTER 11
Allis-Chalmers Corp said the
company and its domestic affiliates filed voluntary petitions
for reorganization under Chapter 11 of the Federal Bankruptcy
Code in the U.S. Bankruptcy Court for the Southern District of
New York.
    The company said its business units outside the United
States are not affected by the action.
    Allis-Chalmers said the rapid agreement was essential for
its restructuring plan, announced March 4.
    However, the company said, "agreement could not be worked
out within the short time frame available, and it was
determined that the only practical alternative was to obtain
court protection."
    "This protection enables us to keep on operating our
business in the ordinary course while affording us time to work
out our obligations and complete our operational restructure
strategy."
    Allis-Chalmers said the proposal announced in March called
for a complete restructuring of its obligations and capital
structure as well as major structural changes in operations.
    The company said funds generated by U.S. operations are
currently inadequate to meet its U.S. obligations, primarily
due to the carryover from discontinued and drastically
downsized businesses.
    It said funds produced by non-U.S. operations are not
readily available to help meet those obligations, which include
a health care program for retirees and debt service carried
over from the larger Allis-Chalmers of earlier years.
    Allis-Chalmers said its U.S. cash flow exceeded a negative
24 mln dlrs in 1986 and was a negative two mln dlrs in the
first quarter of 1987. The company has financed a portion of
its debt service and other obligations through sales of assets
and has relied on short-term waivers from its lenders to
prevent defaults on principal and interest payments.
    Because of Allis-Chalmers' financial position, it said, new
financing facilities were not available outside of Chapter 11,
adding substantially all U.S. assets other than inventory are
pledged as security for its debts.
 Reuter
