Punished by cheaper imports, LTV Corp. says it's strapped for cash and in a dire predicament.
LTV Corp., the nation's third-largest steel company, Friday filed for bankruptcy protection from its creditors and warned it would be forced to shut down if it fails to quickly come up with long-term financing.
The steelmaker, in papers filed in federal bankruptcy court in Youngstown, Ohio, said the company's situation was so serious that without adequate financing "it may be necessary to immediately shut down all of its integrated steel and metal fabrication plants, lay off all of its 18,000 employees and begin to sell core assets."
LTV, which emerged from seven years of bankruptcy protection in 1993, now becomes the ninth U.S. steel company in bankruptcy. The entire American steel industry is under siege from the impact of low cost imports, a situation aggravated by the strength of the dollar against both the Japanese yen and the Euro in the European Union.
"The whole industry is in a very difficult environment," said Mike Gambardella, managing director for J.P. Morgan Securities.
LTV won a short-term reprieve from Chase Manhattan Bank, which agreed to extend the company enough money to keep operations open for at least two weeks while negotiations with the bank continue. The company, which has not had a profit since 1997, recently reported third-quarter losses of $80-million.
Lenders led by Chase Manhattan hold more than $1.2-billion of LTV collateral to cover $600-million in debts. As a result those lenders had first claim to payments from LTV's customers, leaving the steelmaker starved for cash.
New York-based Chase, which is about to complete its acquisition of J.P. Morgan & Co., declined to comment.
LTV also questioned how long it could continue current health and pension benefits for its 70,000 retirees.
"We are aware of our responsibility to our retirees and employees under these programs, but we simply do not have the cash to support them," said LTV chairman William Bricker in a statement released by the company. Bricker said the high fixed cost of the benefit programs put the company at "a severe competitive disadvantage in the new global steel market."
Marco Trbovich, a spokesman for the United Steelworkers union, said the union has been meeting with LTV officials "to do what we can to keep the company in business." He said the union has worked with the company to help preserve the jobs and benefits of its members in LTV's previous bankruptcy and will continue to do so.
Bricker on Friday blamed much of his company's problems on the U.S. government and its failure to enforce existing trade law to protect it from what he termed "unfairly priced" imports. He said the import competition has driven steel prices in the United States to 20-year lows.
The plunge in steel prices has caused LTV to lose $368-million on sales of about $3.8-billion through the first nine months of this year.
"We ask only that our government do its job by enforcing the law and we'll do ours by making the changes needed to succeed in the new steel market," Bricker said in a statement. "LTV and its employees across the nation have been betrayed by the government's reluctance to take action against the "dumping' of unfairly priced steel in the U.S. market by foreign competitors. How many more U.S. steel companies must be driven into bankruptcy before the government acts?"
The U.S. International Trade Commission ruled Thursday there was a "reasonable indication" that the U.S. steel industry has suffered material injury from subsidized or underpriced steel from 11 countries. The commission must now decide whether to impose additional duties on imports from those countries.
But Friday, the U.S. Export-Import Bank confirmed that last week it had approved an $18-million loan guarantee to allow General Electric Corp. and other U.S. manufacturers to sell equipment to Benxi Iron and Steel Co. in China to help it increase production. China is one of the 11 countries cited this week by the trade commission.
Commerce Secretary Norman Mineta had asked the bank to reject the China deal on grounds it would harm U.S. steelmakers.
_ Information from the Associated Press was used in this report.