YOUNGSTOWN, Ohio – LTV Corp. will stop steel production but keep its mills in working condition to allow more time to arrange a loan and find a buyer, under an agreement approved Friday by a federal bankruptcy judge.
The agreement puts on hold until Feb. 28 a permanent shut down of LTV Steel, the nation's third-largest integrated steel company and producer of about 5 percent of U.S. steel.
U.S. Bankruptcy Judge William Bodoh approved the agreement reached late Wednesday between LTV, banks, the United Steelworkers of America and creditors. The deal allows the company to prepare its mills for shutdown if steel operations cannot be sold.
LTV Corp. has been in Chapter 11 bankruptcy protection about a year and was losing $2 million a day. Layoffs will now begin for about 7,500 employees at mills in Cleveland, Hennepin, Ill., and East Chicago, Ind.
"While the decision to shut down steel operations was painful, the economic realities facing LTV made that decision unavoidable," said John D. Turner, chief operating officer. "I hope all of the community concern and effort that has been focused on saving LTV will now be focused on supporting efforts to bring the company's facilities back to productive use under new ownership."
After Bodoh approved the agreement, LTV immediately began to "hot idle" all its steelmaking and finishing facilities, allowing the mills to be easily restarted if they are purchased. LTV will maintain coke plants in Warren and Chicago for three weeks before they are permanently shut down.
Steelworkers outside the federal courthouse said the agreement was the best they could do under the circumstances.
"It will keep a glimmer of hope going," said 26-year LTV worker Bill Starcher. "It's a sad day for Cleveland. A sad day for the nation."
In the agreement, LTV said it will support Steelworkers' efforts to secure a $250 million federal loan. It also will pay up to $20,000 for a consultant who will help attain the loan. The judge is to hold a hearing Dec. 19 on the consultant's progress.
National City Bank and KeyBank have agreed to provide the money if the federal loan guarantee board backs the loan. LTV must demonstrate that the loan can be repaid.
Rep. Dennis Kucinich, D-Ohio, said he is optimistic that a ruling by the U.S. International Trade Commission, which recommended remedies for the steel industry, could make the mills more attractive to a buyer.
The ITC earlier ruled that imports have harmed domestic steel makers. On Friday, it recommended to the Bush administration a range of tariffs and quotas on steel imports.
In October, LTV completed the sale of its LTV Steel Mining Co. in Hoyt Lakes in northeastern Minnesota to subsidiaries of Cleveland Cliffs Inc. and Minnesota Power. The 43-year-old taconite plant in Hoyt Lakes was closed in January, leaving 1,400 workers without jobs.
More than 20 U.S. steel companies have gone into bankruptcy court since late 1997 as prices plummeted.
If a buyer for LTV emerges by Feb. 28, and President Bush hasn't decided on remedies to compensate for illegal steel dumping, the agreement to keep the mills in working condition will be extended to March 15.
As an integrated steel company, LTV handled the entire steel process from ore to scrap.
The company will be back in court Wednesday to discuss a loan to continue operations at Copperweld in Pittsburgh and LTV Tubular in Youngstown. The company plans to sell both units, spokesman Mark Tomasch said.
The company also will seek a rejection of the Steelworkers' contract in court on Dec. 19, which would mean the loss of health care for workers and 100,000 retirees.
"If no viable rescue plan emerges, the state of Ohio is prepared to provide all possible assistance to the LTV work force," Gov. Bob Taft said.
Kucinich told Steelworkers gathered outside the courthouse that it was ironic that LTV stopped production on the 60th anniversary of the attack on Pearl Harbor.
"We're trying to save the very industry that helped save America. We will exhaust every possibility to find a buyer," he said.