Loral-Led Team Wins Bidding for LTV’s Aerospace Business : Reorganization: A bankruptcy judge approves $475-million offer. It means the likely closing of Loral’s Newport Beach missile operation.
A team led by Loral Corp. won the bidding on Thursday for the aerospace operation of LTV Corp., setting in motion the likely closing of Loral’s 32-year-old Orange County plant and transfer of nearly 2,000 jobs out of state.
A federal bankruptcy court judge in Dallas approved New York-based Loral’s $475-million offer on Thursday over a competing $440-million bid by Martin Marietta Corp. in Bethesda, Md.
The victory of Loral and its two partners, Northrop Corp. in Los Angeles and Carlyle Group in Washington, will likely lead to the departure of Loral’s Aeronutronic division in Newport Beach.
As part of its winning bid, the Loral team said it will offer “job protection for LTV workers” by shifting a “substantial amount” of missile work from Newport Beach to LTV plants in Grand Prairie, Tex., or Camden, Ark.
Immediately after the judge’s ruling, Loral Chairman Bernard Schwartz said the defense electronics company is considering moving its Newport Beach operation to one of two sites operated by LTV, which is in bankruptcy proceedings.
“I feel very good, very satisfied. The process works, and the judge runs a good court,” Schwartz said.
The deal must still be approved by the Federal Trade Commission, which will review it for possible antitrust violations.
The Newport Beach division makes Sidewinder air-to-air missiles and other guided-missile weapons. It holds contracts worth $350 million.
Loral spokeswoman Elizabeth Allen said Thursday that the possibility of a move from Newport Beach to the LTV sites should not come as a surprise because the company has said that it needs to relocate production from Newport Beach.
After buying Aeronutronic as part of its purchase of Ford Aerospace Corp. two years ago, Schwartz said he had no plans to move the division from Newport Beach.
The company later disclosed that it would move because of its short-term lease problem. The rent on the prime 99-acre ocean-view property goes from $92,000 a month to $1 million a month in 1996, and the lease expires in 1998.
Mark Losben, 41, was laid off in February after working for the company as an accountant for more than five years. He wasn’t surprised that Loral said it will move the work from Newport Beach.
“I think all the employees have expected there would be a move by 1996 anyway,” he said. “They assured people when they came in it would be business as usual, but some kind of down-scaling was likely.”
The plant has been in Newport Beach since 1960. It was part of Ford Aerospace, the defense subsidiary of Ford Motor Co., until October, 1990, when Loral acquired the Ford unit for more than $715 million.
Northrop spokesman Tony Cantafio said the company was pleased that it was part of the winning bid. Northrop and Carlyle will own the aircraft division, while Loral will own LTV’s missile unit.
“It represents a long-term financial investment for us, and it’s attractive because it gives us a role in the commercial aircraft business,” Cantafio said.
U.S. Bankruptcy Judge Burton Lifland, who is overseeing the reorganization of LTV, rejected a request from Martin Marietta to approve a private sale of LTV’s assets in place of an auction.
He approved payment of a $5-million breakup fee to Martin Marietta by LTV, which had offered to pay $10 million if the bankruptcy court accepted another bid.
The Loral group’s offer consists of $450 million in cash and $25 million in preferred stock. Martin Marietta had offered $425 million in cash and $15 million in preferred stock.
