Danielson Losses Continue to Pile Up

Chicago-based Danielson Holding Corp. (DHC), whose subsidiaries offer barging and marine construction services as well as specialty insurance products, reported a third-quarter loss of $3.4 million, or 11 cents per diluted share. That compares with a loss of $18.3 million, or 59 cents per diluted share in 2002.

For the first nine months of 2003, DHC reported a loss of $65.8 million, or $2.13 per diluted share versus a loss of $14.0 million, or 57 cents per diluted share in the first nine months of 2002. The loss for the first nine months of 2003 includes $55.2 million attributable to its investment in American Commercial Lines LLC (ACL), which was written down to zero during the period.

The current quarter and nine-month figures include results from Danielson Indemnity Co. and its subsidiary National American Insurance Co. of California, a California property/casualty company, along with ACL and two related companies — Global Material Services LLC, a network of marine terminals and warehouse operations located on major river systems in the United States, Europe and South America and Vessel Leasing LLC, a company that leases barges to ACL.

On Jan. 31, 2003, ACL filed a petition to reorganize under Chapter 11 of the U.S. Bankruptcy Code. Neither DHC, GMS nor Vessel Leasing filed for Chapter 11 protection. DHC, GMS and Vessel Leasing are not guarantors of ACL’s debt nor are they liable for any of ACL’s liabilities.

The ACL Chapter 11 Bankruptcy process presents inherent material uncertainty; it is not possible to determine the additional amount of claims against ACL that may arise or ultimately be filed, or predict the length of time that ACL will continue to operate under the protection of Chapter 11, the outcome of the Chapter 11 proceedings in general, whether ACL will continue to operate in its present organizational structure, or the effects of the proceedings on the business of ACL, or on the interests of DHC and the various creditors of ACL.

The ultimate recovery, if any, by DHC and the creditors of ACL will not be determined until confirmation of a plan or plans of reorganization. No assurance can be given as to what value will be ascribed in the bankruptcy proceedings to each of these constituencies. While it cannot presently be determined, DHC believes it will receive little or no value with respect to its equity interest in ACL.

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