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LTV files for Chapter 11
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December 29, 2000: 1:46 p.m. ET
U.S. steelmaker seeks bankruptcy protection, 18,000 workers may be hit
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NEW YORK (CNNfn) - LTV Corp., the third-largest U.S. steelmaker, filed for Chapter 11 bankruptcy protection Friday, a move which could affect 18,000 workers.
LTV said it has filed for protection and reorganization in federal court due to "a weakening U.S. economy and the inaction of the government in enforcing long-established U.S. trade laws."
The company has blamed its widening losses on price pressure from cheap imported steel. In Chapter 11, a company is protected from its creditors while it tries to reorganize and repay its debts.
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 ABOUT LTV CORP.
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No. 3 U.S. steelmaker, based in Cleveland; reported $80 million loss in third quarter.
Employees: about 18,000
Plants: more than 50
Retirees: more than 70,000
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LTV warned in its filing it may be forced to shut down all of its plants, lay off all 18,000 employees and begin to sell core assets.
But LTV chairman, president and CEO William Bricker said in a statement "the doomsday scenario" can be avoided if the company can obtain further financing. Bricker said the company must also reduce its fixed costs.
A spokesman for LTV told CNNfn the company's "confidence level has increased dramatically in the last 12 hours" that they would secure the needed financing from Chase Manhattan Bank.
Chase (CMB: Research, Estimates) recently decided not to loan LTV $225 million. A spokeswoman for Chase declined comment.
Salomon Smith Barney steel analyst Michelle Galanter Applebaum said she believes LTV has no intention of actually shutting down, but is using the Chapter 11 tactic to pressure lenders into providing funding.
"LTV is using a high-risk strategy," Applebaum said.
She said LTV will be hurt even if it receives funding, with customers taking their business to more reliable steel companies.
LTV blames cheaper, imported steel
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LTV is responsible for its own predicament .. Every discretionary choice they have made has been wrong.
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Michelle Galanter Applebaum
Salomon Smith Barney steel analyst |
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In late October, LTV reported a third-quarter loss of $80 million, larger than expected by Wall Street, and losses for the first nine months of the year totaled $368 million. The company also said it was in the process of cutting 3,600 steel jobs. Nearly two weeks later, the board forced out LTV chairman, president and CEO Peter Kelly, replacing him with Bricker.
The company has notified federal, state and local elected officials of its financial position and has urged lawmakers to fight against foreign dumping of steel.
"We ask only that our government do its job by enforcing the law and we'll do ours by making the changes needed to succeed in the new steel market," Bricker said in a statement. "LTV and its employees across the nation have been betrayed by the government's reluctance to take action against the 'dumping' of unfairly priced steel in the U.S. market by foreign competitors. How many more U.S. steel companies must be driven into bankruptcy before the government acts?"
Cleveland-based LTV (LTV: Research, Estimates) is the ninth U.S. steel company to enter bankruptcy in just the past two years.
But Applebaum said it is not the steel industry, but the company that is the problem.
"The reason they are in trouble is because they took on too much debt for acquisitions away from the steel business," she said. "LTV is responsible for its own predicament."
She said the company erred by taking on $1 billion in debt to acquire non-steel businesses and also angered unions by opening a non-union plant.
This is not the first time LTV has sought government protection. The company filed for Chapter 11 in 1986.
According to Applebaum the company looked to rebound in 1993 when it emerged from six years of organization, but the company strayed from its plan.
"Every discretionary choice they have made has been wrong," she said.
Lawmakers, however, are taking note of the company's predicament.
Rep. Dennis Kucinich, D-Ohio, said as many as 40,000 workers would feel the effects if LTV closed down, as well as LTV pensioners. (485K WAV or 485K AIFF)
The company pays $200 million annually in health care and other insurance benefits to about 70,000 retirees and their families.
Trading of LTV stock was halted at 34 cents Friday on the New York Stock Exchange. 
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LTV
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