Payoff

Much of the recent news about Henry J. Kaiser's industrial empire has had a familiar ring: it concerned loans from RFC to the faltering Kaiser-Frazer Corp. Henry Kaiser, who had received $44 million for K-F and another $123 million for the Kaiser Steel Corp., was RFC's biggest single business loan.

Last week Henry had a different kind of news to report. The RFC, he said, would soon get back the $91 million it had lent to Kaiser Steel, which operates the Fontana (Calif.) steel plant. What was more, Kaiser planned to expand Fontana's capacity by 15% (to 1,380,000 tons a year) and install a tinplate plant with a capacity of 200,000 tons a year. With the tinplate facilities, he hopes to get a big slice of business from the West's canning industry, which consumes some 700,000 tons of tinplate a year, most of it brought from the East.

The whole program, said Kaiser, will cost $125 million. Part of the money ($40 million) will come from a new public stock issue of 2,400,000 shares in Kaiser Steel. Of the rest, $60 million will come from the sale of first mortgage bonds to banks and insurance companies and the other $25 million from loans from the Bank of America, the Mellon National Bank & Trust Co. and Chase National Bank.

Since the cost of duplicating Fontana is estimated at $200 million, at least, it looked as if the bonds and stocks were amply backed, especially since Fontana has always made a profit.

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