LTV STEEL Investment firm to offer $125M
The offer includes restarting LTV Steel operations immediately.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
CLEVELAND -- A New York investment firm said it will pay $125 million in cash for LTV steel mills and the Warren coke plant if its bid is accepted today.
The offer by WL Ross & amp; Co. is subject to an auction today where other companies could make higher bids. The bid also would have to be approved by Judge William Bodoh of U.S. Bankruptcy Court in Youngstown. A hearing is scheduled in court Thursday.
If successful in the bidding, Ross said it intends to restart LTV Steel operations immediately. It is bidding on LTV steel mills in Cleveland, Indiana and Illinois, which have 7,000 workers laid off, and the Warren plant, which used to employ 200.
Union issues: Ross said it has reached an agreement in principal with the United Steelworkers of America to negotiate a new union contract. David McCall, Steelworkers district director, said Ross has agreed to hire LTV union members for all of the plants.
Ross didn't say how many workers it expected to hire, but union officials have estimated Ross would need about 5,000 workers.
Leo Gerard, Steelworkers president, said this morning that Ross' taking over the mills, plus additional tariffs on foreign steel, would "save the jobs of many steel workers at LTV."
Union officials and community leaders have been supporting Ross' bid because it said it would reopen all of the plants. Other bidders have expressed interest in operating only part of LTV Steel operations.
In order to succeed, Ross said it needs lower overhead costs and the increased steel tariffs, which are being considered by President Bush.
LTV Steel plants, including the Warren plant, have been idling without production since December.
What offer includes: Ross' offer includes $125 million in cash and $200 million in the assumption of environmental and other liabilities.
The offer requires LTV to pay Ross a $4 million breakup fee if it is not the confirmed buyer.
"We are hopeful that these mills, which have a global reputation for high quality products, can be highly profitable and globally competitive," said Wilbur Ross, chief executive of the bidder.
He said he intends to appoint Rodney Mott as president and chief executive of the new company. Mott, 50, has worked for Nucor Steel and U.S. Steel.
"He has the unique ability to meld the best of minimill efficiencies with the inherent quality advantages of the integrated process into a new kind of American steel company," Ross said.
Reaction: Glenn Moran, LTV chairman and chief executive, said he is pleased that an investor such as Ross values LTV operations. LTV is liquidating its company through bankruptcy court proceedings.
Mott said the new steel company expects to produce 4 million tons of flat-rolled steel and generate more than $1 billion in sales per year. He said it has received expressions of support from customers and suppliers.
Ross has offices in New York City, Tokyo and Seoul and invests globally in distressed companies on behalf of partnerships funded by major U.S. institutional investors. Among its U.S. investments are Anker Coal Co., Morgantown, W.Va., Clarent Hospital Corp. in Houston, and bonds of Burlington Industries and Fruit of the Loom.