LTV Ravaged by Losses, Files for Bankruptcy
LTV Corp., the giant conglomerate crippled by monumental losses in its steel and energy divisions, filed for protection today under Chapter 11 of the federal Bankruptcy Code.
The filing culminated the Dallas-based corporation’s unsuccessful efforts to restructure its debts and recover from $1.5 billion in losses since 1982. Financial analysts said the petition, filed in New York City, had been anticipated for several weeks.
The company’s common stock, which opened after the bankruptcy announcement, was trading at $2.125 this afternoon, down $2.25 from Wednesday. At their highest, LTV shares in recent years have traded at about $23.
Charles M. Palmer, spokesman in Dallas, said the reorganization will include the LTV Corp. and its principal subsidiaries, including LTV Steel, LTV Aerospace and Defense and LTV Energy Products.
Automotive Supplier
The company is a primary supplier of steel products to the automotive, appliance and construction industries. On the basis of shipments and production, LTV’s steel unit is the second largest in the United States behind USS, a subsidiary of USX Corp., formerly known as U.S. Steel Corp.
LTV Corp. is 43rd on the Fortune magazine list of the 500 biggest U.S. industrial companies, ranked according to 1985 sales.
Palmer said Raymond A. Hay was expected to stay on as chairman and chief executive officer and that no immediate layoffs among the 56,000 employees were planned.
“(LTV’s) recent problems included a sudden and significant decline in second-quarter steel shipments from anticipated levels and less than expected pricing levels for the third quarter,” Hay said.
“This . . . was accompanied by a sharp decline in the number of active drilling rigs which negatively affected the company’s energy and steel businesses.”
Alan Coleman, director of banking at Southern Methodist University in Dallas, said LTV’s problems “mirror those in the entire steel industry in this country” and warned the Chapter 11 action would have national and international impact.
Hay said the reorganization will enable the company to reduce costs and restructure debt “without the cash-flow problems it now faces.”
“We are open for business today, tomorrow and thereafter and expect to be able to meet all commitments to customers,” Hay said.
The company’s steel division was merged with Republic Steel in 1983 to create LTV Steel in a stock deal valued at $750 million. But the merged unit had to face stiff competition from cheap foreign imports.
LTV’s aerospace division, its most profitable subsidiary, has a backlog of $5-billion worth of defense contracts, Palmer said.
Hay joined the company in 1975 as president and chief operating officer and became chairman in 1982, succeeding Paul Thayer.
Insider Trading Case
Thayer, former deputy defense secretary, and Dallas stockbroker Billy Bob Harris were sentenced in May, 1985, to four years in prison and fined $5,000 each for giving false information in an insider trading case that involved LTV securities, among others.
Last April, LTV’s union employees approved a 40-month contract that included cuts in wages and benefits by more than $3 an hour aimed at saving jobs and avoiding bankruptcy.
The agreement covered 22,000 workers and 6,000 laid off employees at LTV plants in Pennsylvania, Ohio, Indiana and Illinois.
“They’re probably going to want more cuts out of this,” said Gary Johns, who works for LTV Steel in Cleveland. “I’ll tell you what, I’m not going to work for $8 or $9 an hour.”
