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LTV Files Reorganization Plan

January 20, 1993

NEW YORK (AP) _ LTV Corp. filed a bankruptcy reorganization plan under which the steelmaker will repay $850 million to its pension funds and reimburse creditors with cash and stock.

The plan, filed with U.S. Bankruptcy Court Tuesday and released to the press on Wednesday, also calls for Sumitomo Metal Industries Ltd. to invest $200 million by purchasing stock and notes in LTV.

LTV, which has been in bankruptcy court for six and a half years, said it could emerge from Chapter 11 protection in the spring if the plan is approved by a federal judge and creditors. A hearing on the proposal is scheduled for Feb. 17, and a creditor vote is tentatively set for March.

The LTV Parent Creditors’ Committee said in a statement it supports the basic economic terms of the plan ″as a fair compromise of the numerous complex issues.″

The plan provides for LTV to pay $850 million in cash to three pension plans as part of $3 billion in pension-related claims; the rest will be paid out over 28 years.

Proceeds from the Sumitomo investment will go toward the pension claim. LTV had announced in July 1991 that Sumitomo was interested in investing in the company after its emergence from bankruptcy court.

The reorganization plan resolves more than 125,000 claims totaling $9 billion, including the $3 billion in pension claims.

Secured and priority creditors will receive 100 percent on the dollar for their claims. General unsecured claims will be paid in new common stock or a combination of stock, cash and other considerations.

Current holders of LTV’s common and preferred stock will receive warrants valued at $5 million to purchase new stock over a five-year period a a still- to-be-determined price.

Upon confirmation of the plan, existing preferred and common LTV stock will be canceled and new common stock will issued worth between $15.42 and $19.11 per share. The company expects that stock to have a value exceeding $1.3 billion.

Some 73 million to 76 million shares of the new stock will be issued, with 50 million shares going to unsecured creditors. The remainder will be divided among Sumitomo, LTV employees and the pension plans.

The Pension Benefit Guarantee Corp., the federal agency that insures employee pension plans, is to purchase $50 million worth of the new stock.

LTV says it will remain the nation’s third-largest steel company and one of the largest North American suppliers of products and equipment to the oil and natural gas industry.

″We believe the restructuring of our business operations over the past six years and the restructuring of our finances ... will permit the post-Chapter 11 company to be competitive and successful,″ LTV chairman David H. Hoag said in a statement.

While under court protection, LTV sold assets including its aerospace and defense divisions. The company also moved its headquarters in September from Dallas to Cleveland, home of its steel operations, and is building a caster there.

Once operational by the end of 1993, the caster will allow the company to completely produce its steel products by the most modern and efficient method.

The company is a major supplier to the domestic automobile manufacturing industry and the largest supplier to other industries requiring steel products.

″The Chapter 11 process enabled the steel group to consolidate and restructure its raw materials operations and lower its raw materials costs to competitive levels,″ the company said in court papers.

″Unprofitable and non-competitive operations, or those not consistent with the plan, have been idled, shut down or sold.″

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