LTV STEEL Shutdown foes state their case

In the face of stiff questioning, LTV officials maintain they have no choice but to idle plants.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN --Lawyers battling LTV Corp. delayed the company's plan to begin shutting down its steel mills and coke plants today.
Union and community officials hope that facts produced during cross-examination of LTV officials in court will do much more.
"You can make a case for survival of LTV based on what you heard today," said U.S. Rep. Dennis Kucinich after testimony Tuesday in federal bankruptcy court in Youngstown.
So many lawyers are involved in trying to stop LTV from shutting down its steelmaking operations that the one day allotted for testimony by LTV officials Tuesday was not enough. Lawyers for cities, government agencies, creditors and the United Steelworkers of America thoroughly questioned LTV executives.
More testimony was under way this morning on the Cleveland-based steelmaker's request to idle plants with the hope of selling them. The company's motion asked that idling begin today.
Company officials assured concerned lawyers that no idling of plants would begin until testimony is completed and Judge William Bodoh has ruled.
Judge Bodoh said the issue is whether he should substitute his business judgment for that of LTV. He can't stop LTV from closing plants, but he does have authority to rule on the sale of plants and related issues.
Officials' stance: John Turner, LTV chief operating officer, and Thomas Garrett, chief financial officer, testified that LTV had no choice but to seek the sale of steel mills in Cleveland and Indiana, a finishing mill in Illinois and coke plants in Chicago and Warren.
Closing the plants would eliminate about 7,500 jobs, including 200 in Warren. LTV intends to continue operating its profitable Copperweld and tubular products plants, including one in Youngstown.
LTV officials said they are unable to save the whole company because they couldn't get a federal board to guarantee a $250 million loan, couldn't get adequate concessions from the union and was nearly out of cash when it filed the motion last month.
The best way to protect the value of the company's estate and provide the most money to pay creditors was to sell the plants, they said.
Opponents' issues: Opposing lawyers, however, tried to show that LTV acted prematurely in filing the motion.
"If they want to operate, they can," said Kucinich, a Cleveland Democrat. "They're dedicated to liquidate."
Lawyers opposing LTV's plan focused on these issues:
U Uncertainty of LTV's sale plan. Several of the lawyers complained that they had not seen the plan and only a one-page summary had been presented to the court. LTV officials said some parts of the plan were still being fine-tuned.
Opposing lawyers pointed out that LTV lenders, who must approve spending for the plan, have not done so. LTV officials said, however, that they have worked with the lenders in developing the plan.
UFederal help. The International Trade Commission is nearly ready to recommend penalties for foreign steel illegally dumped in this country and President Bush is supposed to enact penalties in mid-February. LTV officials said that tariffs or quotas on foreign steel could boost the price of steel and help LTV finances.
Also, lawyers elicited testimony that the federal loan guarantee still is possible, although LTV officials stressed they think approval will remain unlikely, given the company's condition.
U.S. Rep. Steven C. LaTourette of Madison, R-19th, testified this morning that he expects a change in the federal loan program to be included in an economic stimulus bill that Congress is considering. The change would make it easier for the loan board to approve a guarantee for LTV, he said.
UUnion concessions. Lawyers asked repeatedly why LTV seemed like it was not interested in concessions that the union agreed to make last week in negotiations with unsecured creditors. LTV officials said the proposal was $326 million short of the $680 million in cost-cutting that the company needs over four years. In testimony this morning, Turner said the labor agreement was conditional on approval from LTV lenders, but the lenders have said they would not agree to the plan.
U Available cash. LTV said its steelmaking operations had only $32 million in cash when it decided to seek a sale of its plants two weeks ago. It said that was a low amount because it needed $30 million to fund the sale procedure and make payroll.
Garrett said that LTV on Monday had increased its cash to $125 million. He said that increase didn't change company officials' belief that a sale was necessary, but Kucinich said it showed the company had money to operate.
LTV officials said, however, they have no orders going forward because all customers deserted when the plan to sell plants was filed. Bruce Simon, a Steelworkers lawyer, called that a self-inflicted wound. Ohio lawmakers approved a plan Tuesday to loan LTV $5 million in emergency operating funds, contingent on Cleveland and Cuyahoga County each providing an additional $5 million.
LaTourette said the state legislators were to vote today on a $23 million state loan that would fund LTV operations for seven to 10 days.
U Double bonuses. LTV officials said their plan calls for $13 million in bonuses to be paid to certain employees who stay with the company if plants are sold. About 680 are to take part in the bonuses early on, with 13 remaining at the end.
There was confusion over whether bonuses under another employee retention plan approved earlier this year would become vested if the judge approves the current request. Some lawyers said such a triggering event wasn't in the first order, but an LTV official said that was the company's intention. The earlier plan included more than $10 million for about 110 employees.
shilling@vindy.com