Ira Rennert's House of Debt

Few financiers can boast as long and lucrative a career as Ira L. Rennert. During the 1990s, the 68-year-old Brooklyn native sold $1.5 billion in high-yielding junk bonds to create one of the nation's largest privately held industrial empires and built a personal fortune estimated at $500 million. Now he may be about to hit his biggest payday yet: Investment bankers are shopping his crown jewel, South Bend (Ind.)-based AM General Corp., to potential buyers. The company makes Humvees for the U.S. Army. The civilian version, the Hummer, costs $100,000 or more for celebrities such as Arnold Schwarzenegger and Andre Agassi. Rennert picked up the company for about $133 million in 1992, but it has a hot seller on its hands now--the rugged $55,000 H2 sport-utility vehicle. A sale could fetch him as much as $1 billion, bankers say.

Rennert sure could use the money: His empire is on the ropes. Two of his companies--a Kentucky coal company and a Utah magnesium producer--have filed for Chapter 11 bankruptcy protection in the past two years. Two others, a steelmaker and a lead producer, both reported big losses in their most recent filings. "Rennert has a track record of dramatically leveraging up companies with debt," says Thomas A. Watters, an analyst at Standard & Poor's. "They're really financially distressed." On top of that, Rennert and his holding company, Renco Group Inc., face fines of up to $1 billion if they lose a suit filed by the Environmental Protection Agency that charges the magnesium company with mishandling toxic waste near the Great Salt Lake in Utah. Renco is vigorously contesting the suit.