YOUNGSTOWN, Ohio — LTV Corp. filed for bankruptcy protection Friday for the second time in its history, blaming unfair imports for driving steel prices to 20-year lows.
"We are a tough, determined company, but our industry has changed dramatically in recent months," said William Bricker, chairman of the nation's third largest steel company and the ninth to file for bankruptcy in the past two years. "We seek only the time and financial resources to adjust to these changes."
The Chapter 11 filing under the U.S. Bankruptcy Code will give the Cleveland-based company time to obtain more bank loans, preserve its relationships with customers and suppliers, and maintain employee confidence, LTV said in court documents. But the steelmaker, which employs 18,000, warned that it might have to shut down if it can't secure new financing.
LTV attorney Richard Cieri told Judge William T. Bodoh that a tentative agreement had been reached with Chase Manhattan Corp. to provide short-term financing for LTV in the interim.
The deal was disclosed a day after Bricker said in a letter to Cleveland officials that LTV had expected to secure $225 million in loans from Chase in order to prevent shutdowns, but that the bank abruptly backed out.
Lenders led by Chase Manhattan Corp. 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.
The judge approved a financing plan that will give LTV quicker access to $300 million a month in revenue and ease the cash-flow problem, said George Henning, the company's chief financial officer. In return agreement provides Chase and other lenders a lien on other LTV holdings.
The New York-based Chase, which is about to complete its acquisition of J.P. Morgan & Co., declined comment.
LTV said the price of hot-rolled steel has dropped from $330 a ton in the first quarter to 20-year lows of $270 this month while subsidized steel from Argentina, China, India, Indonesia, Romania, South Africa and Ukraine is up 111 percent in the past year.
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.
"The whole industry is in a very difficult environment that was brought on the surge of imports earlier in the year when the dollar strengthened against the euro," Mike Gambardella, managing director for J.P. Morgan Securities, said.