Executive’s $100,000 Buys 34.2% of Ailing Steel Firm

According to one admiring competitor, Lloyd C. Lubensky never pays retail. In keeping with his background in the chancy, competitive business of buying and selling surplus airplane parts, Lubensky is said to be a bargain hunter extraordinaire.

The 64-year-old Van Nuys executive proved that when he bought a 34.2% stake in ailing Wheeling-Pittsburgh Steel on Dec. 31 for the fire-sale price of just $100,000--from a man who paid $50 million to accumulate the same stake in 1983 and 1984.

For his money, the intensely private president of American Jet Industries, based at Van Nuys Airport, gained a controlling interest in the nation’s eighth-largest steelmaker for less than 6 cents a share. The stock closed Monday on the New York Stock Exchange at $8.375.

Survival Questionable

Lubensky himself insists the deal may not be such a bargain: Wheeling-Pittsburgh, based in Pittsburgh, filed for Chapter 11 protection in April, 1985. The federal government has about $900 million in claims against it. And with the U.S. steel industry so burdened by overcapacity, high costs, and foreign competition, Wheeling-Pittsburgh’s long-term survival is questionable.

“There’s a tough road to hoe,” Lubensky said.

“They’ve got serious difficulties,” affirmed Charles Bradford, a steel analyst with Merrill Lynch Capital Markets. “I can’t see where there’s anything left for the shareholders after the bankruptcy proceeding.”

There also has been published speculation that the purchase was merely one of convenience, because the seller and former Wheeling-Pittsburgh chairman, Allen E. Paulson, was an old friend of Lubensky’s eager to get the tax advantages of a sale before the year ended.

“No way,” Lubensky retorted Monday.

Purchase Viewed as Bargain

He insisted the stock sale was final and legitimate, and that he made the purchase because he loves a bargain and is convinced the company will turn around. Paulson has said he sold at a loss on Dec. 31 to take advantage of tax benefits, but he could not be reached for comment Monday when the magnitude of the loss was revealed.

A Wheeling-Pittsburgh director since October, 1985, Lubensky said he does not want to become chairman soon despite his controlling interest in the steelmaker. He said he would wait at least “until I know a lot more about the business than I do now.”

Wheeling-Pittsburgh said Monday that its vice chairman and chief executive, George A. Ferris, will be acting chairman until the next board meeting, in February, and that John P. Innes II, managing director of Sabre Insurance Co., was named to fill Paulson’s seat on the board.

Lubensky said he is formulating plans for the company’s future and expects to make some changes on its board of directors, and possibly its management, soon. Although he will not be chairman, Lubensky said he expects to be active in the company’s day-to-day affairs.

Investing in Wheeling-Pittsburgh turned out to be a major miscalculation by Lubensky’s friend Paulson, an industrialist who makes few such mistakes. Paulson is the founder of Gulfstream, a successful maker of private jets that was bought by Chrysler two years ago for $640 million. Forbes magazine estimated last fall that Paulson is worth more than $300 million.

But Lubensky has prospered by following in Paulson’s footsteps before. Paulson founded American Jet in the late 1950s and sold it to Lubensky in 1982 for an undisclosed sum. Lubensky sold American Jet, which buys and sells surplus airplane parts, to Ryder System in August, also for an undisclosed sum. Lubensky remains president, and competitors say he has done well with the business.

Down-to-Earth Executive

Those who know him describe Lubensky as a quiet, intense, down-to-earth businessman who works long hours and enjoys fishing and tennis for relaxation. A former World War II bomber pilot, he is said to favor an informal, hands-on style.

“I think he knows how to watch the store,” Paulson said last week.

All agree that Wheeling-Pittsburgh’s new man of steel is the opposite of flashy; a small-town boy from Marshall, Mo., he is generally seen as both unpretentious and private.

Raymond Johnson, public relations director for the Pittsburgh-based steelmaker, recalls asking American Jet for a biography and photograph of its president for press purposes.

“Neither was on file,” he said.

So Johnson arranged to have a photographer on hand at last week’s board meeting. But Lubensky refused to be photographed.

“I’m very conservative by nature,” Lubensky explained. “I’m not looking for any publicity.”

Private Man

David Seely, president of 57th Aerospace Group Inc. in North Hollywood, said Lubensky knows how to play his cards close to the vest. Seely said he once sat down with Lubensky to talk about a merger, joint venture, or other connection between his surplus parts firm and American Jet.

Both firms are privately held, and Seely said he disclosed important details about his business. But Lubensky revealed nothing.

“He’s not one that gratuitously gives you information,” said Seely.

Nevertheless, Seely said, he learned independently that American Jet did $15 million in sales last year, had cash of about $2 million and had an enormous inventory that was impossible for an outsider to value.

John Miles, American Jet’s chief financial officer, said the firm is among the largest surplus airplane-parts suppliers in the West, with 140,000 square feet of warehouse space in Van Nuys and other buildings spread across five or six acres at an old Marine base in Mojave, Calif.

Firm Employs 45

He said the firm has about 45 employees, but that is no measure of size in the spare parts business. The business depends on inventory, capital and savvy purchasing more than anything else, Seely said.

“He’s an extremely hard worker and takes hands-on control of anything he tackles,” Miles said of his boss.

He will have to make quite a tackle at far-off Wheeling-Pittsburgh, which recently announced that it will take a $223-million charge against fourth quarter operations, mainly due to the closing of its Monessen, Pa. rail mill.

For the nine months ended Sept. 30, the company lost $37.1 million on sales of $693.7 million. Wheeling-Pittsburgh has about 8,200 workers and, as a result of plant closings, operates at about 85% of capacity, better than the 60% average for the American steel industry.