Judge Approves Renco Bid For Humvee Manufacturer
NEW YORK (AP) _ A bidding war for the maker of the Humvee military vehicle took place in federal bankruptcy court on Friday, with a New York holding company placing a winning offer of $133 million.
AM General Corp. of South Bend, Ind., was sold as part of the reorganization of its parent company, LTV Corp., which received Chapter 11 bankruptcy protection in July 1986. LTV went to bankruptcy court burdened by $3 billion in underfunded pensions to its steel subsidiaries.
AM General is best known as the manufacturer of the Humvee, the military’s acronym for high mobility multipurpose wheeled vehicle. The 2 1/2 -ton, 150 horsepower vehicle gained considerable popularity during the Persian Gulf War as troops marveled at its speed and agility.
The Humvee, which replaced the World War II vintage Willys jeep, has been offered for sale to civilians for $42,500. Actor Arnold Schwarzenegger bought the first civilian model in June and reportedly fixed it up with a custom stereo system.
U.S. Bankruptcy Judge Burton Lifland approved a bid by New York-based Renco Group Inc., a privately owned holding company with interests in a range of industrial businesses.
Renco valued the bid at $133 million, comprised of $65 million in cash and the rest in securities. It beat a competing bid of $117.5 million managed by Cleveland investor Dan T. Moore Co.
The hearing began with Renco’s offer of $90 million, which it had advanced at a hearing last month. Moore upped the ante to $109 million and later to $117.5 million before Renco’s winning bid was approved.
LTV attorney Myron Kirschbaum recommended the Renco offer and attorneys representing LTV creditors agreed, despite an objection from some of the creditors that any sale should be part of a comprehensive reorganization.
The sale, which requires government approval, could be completed by February, said LTV attorney Michael Crames.
LTV acquired AM General, which employs about 1,650 people, from now-defunct American Motors in 1983. In addition to the Humvee, AM General provides technical support for U.S. Army tanks and trucks; 1990 sales were about $374 million.
Renco had bought LTV’s steel plant in Warren, Ohio, in 1988.
Michael Nicholson, an attorney for the United Auto Workers union, which represents AM General workers, said he was pleased with the winning bid and expected to have good relation Renco owner Ira Rennert.
Also during the hearing, LTV updated the judge on talks it is holding with three creditors groups as they try to come up with one reorganization plan.
″Perhaps for the first time we have forged resolution to key economic issues between the constituencies,″ LTV attorney Crames told Judge Lifland. He said a 24-point agreement has been reached with LTV’s steel and parent company creditors and believed differences could be bridged with LTV’s aerospace and and defense creditors.
Crames didn’t disclose details of the 24-point agreement.
The LTV bankruptcy case is one of the largest and longest-running in the nation. In May, the company filed a reorganization plan that proposed the sale of its lucrative defense subsidiaries to raise money for repaying the underfunded pension plans and creditors.
The Wall Street Journal reported in Friday’s editions that Martin Marietta Corp. and Lockheed Corp. are ″moving toward″ making a bid of more than $350 million for LTV’s aerospace and defense business.
Quoting unnamed sources close to the negotiations, the Journal said the pair would run the LTV operations as a 50-50 joint venture if their bid was successful.
A person familiar with the talks said Friday Martin Marietta and Lockheed were just two of several bidders for LTV’s aerospace and defense units. The companies, based in Texas and Arkansas, have annual sales exceeding $2 billion. The LTV aerospace and defense businesses have been for sale since LTV filed its own reorganization proposal last spring.
Crames, the LTV attorney, mentioned the published report during the court hearing, but did not identify any proposed buyers. But Crames said an agreement for sale of the aerospace and defense businesses could be reached by the end of next week.
Spokesmen for Martin Marietta and Lockheed declined comment on the published report.