YOUNGSTOWN, Ohio – A bankruptcy judge overruled the objections of shareholders Monday and approved a new labor deal for LTV Corp., which is trying to reorganize its finances.
U.S. Bankruptcy Judge William Bodoh approved the deal worked out between the United Steelworkers of America and a committee of creditors and later endorsed by the Cleveland-based company.
The nation's third-largest integrated steel maker has been under court protection from creditors since Dec. 29. The company said in June that without a new labor contract it would be forced to liquidate by September.
"The agreement represents another step in building momentum toward the restructuring of LTV Steel," company spokesman Mark Tomasch said.
Committees representing LTV shareholders and note holders objected to the labor pact, focusing their concerns on an offer to give Steelworkers stock in LTV, profit sharing and a second board seat.
Under the known terms of the deal, the Pittsburgh-based union would own 20 percent of the company once it emerges from bankruptcy protection.
The Steelworkers will hold a ratification vote. The union will count votes Aug. 28 at its Pittsburgh headquarters.
According to the Steelworkers, the contract would run through Feb. 1, 2006, and cover 9,000 employees of LTV Steel, including 3,200 in northeast Ohio. LTV operates in 17 states, Canada and Britain.
Creditors, largely LTV suppliers, took over the negotiations shortly after LTV asked the judge to throw out the union contract altogether in June.
Other provisions of the deal would reduce LTV's work force by 1,300 "full-time equivalents," using attrition, overtime reductions and cuts in contractor labor before any layoffs. LTV had originally sought 500 job cuts but the union agreed to more to save health benefits and pensions.
The deal also would allow the company to borrow about $140 million from an existing benefits guarantee fund to pay current health care costs. The union created the fund as a hedge in case the company went bankrupt.
U.S. Rep. Dennis Kucinich said he was "reassured" by the agreement. The Democrat from Cleveland has been working to save jobs at struggling steel makers.
"There was give and take on all sides in this first important step to saving the company and the future of domestic steel produced in Ohio," Kucinich said.
Union spokesman Marco Trbovich said Steelworkers still want the federal government to pass measures that fight low-cost imported steel, secure emergency loans for steel makers and subsidize retiree health care costs.
"It's absolutely necessary for there to be federal action in those three areas," he said. "It's integral to this agreement."