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Published: Thursday, 8/26/2004

Cash hoard at biggest area firms exceeds $4B

BY HOMER BRICKEY
BLADE SENIOR BUSINESS WRITER

The largest Toledo area companies have hoarded more than $4 billion in cash, but little of it will directly benefit the local community.

As at other corporations nationwide, the cash pools will be used to pay higher dividends, to buy back stock, to reduce debt, and to modernize facilities.

But a big chunk of the cash stash of the area's 14 biggest firms eventually will go to asbestos-injury claimaints who have filed lawsuits against Owens Corning, which soon will enter the fifth year of its Chapter 11 bankruptcy reorganization.

The lion's share of cash held in this region is in the hands of the four Fortune 500 companies, which collectively have $3.4 billion in cash or highly liquid short-term investments, more than double the $1.4 billion held five years earlier.

"When you're trying to become investment grade, you want more cash because borrowing is more expensive, said Dana Corp. spokesman Gary Corrigan. The bonds of Toledo's largest firm are rated junk quality, which means borrowing is more expensive.

Its cash at the end of June, according to its government filings, was $597 million, six times the amount five years ago. Dana expects about $1.1 billion in cash in the third quarter from the sale of its replacement-parts operations. Much of that will be used to shore up the pension fund and reduce Dana's debt of $2.5 billion.

Owens-Illinois Inc. also is expecting a cash infusion of about $1.2 billion from the recent sale of its global plastic-container business. That will add to the mid-year cash level of $325 million. Most of the new cash will be used to help pay debts totaling $6.7 billion.

OC, the area's third largest corporation, had $874 million in cash plus $1.6 billion in cash and securities held in trust for asbestos claimants, according to its latest government filings. A spokesman said the firm plans to spend some of the money to upgrade five factories, including an insulation plant in Toronto.

The other local Fortune 500 firm, Cooper Tire & Rubber Co. of Findlay, has relatively modest cash holdings of $29 million.

Another Toledo company, Manor Care Inc., has a $123 million cash stockpile. It has been spending much of it for dividends as well as for stock buybacks and facility improvements, a spokesman said.

Among the rest of the local Fortune 1,000 firms, Tecumseh Products Co. had $283 million in cash at midyear, La-Z-Boy Inc. had $29 million, and The Andersons Inc. had $8.8 million.

The three largest banks in the region had $269 million in cash or cash equivalents, but that total does not include billions of dollars held in highly liquid government securities and stocks that could be sold quickly for cash.Banks have to keep a fair amount of cash on hand for a variety of purposes, including needs of branches and automated-teller machines, said Kevin Thompson, chief financial officer of Sky Financial Group Inc., which had $223 million in cash at midyear.

Contact Homer Brickey at:

homerbrickey@theblade.com

or 419-724-6129.



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