Printer Friendly

LTV FILES DISCLOSURE STATEMENT AND MODIFIED PLAN OF REORGANIZATION

 CLEVELAND, Jan. 20 /PRNewswire/ -- The LTV Corporation (NYSE: QLTV) late Tuesday filed its second modified Chapter 11 Plan of Reorganization and Disclosure Statement. A hearing on the disclosure statement, which is subject to further amendment, is scheduled for Feb. 17 at the United States Bankruptcy Court in New York City.
 If the disclosure statement is approved by the court, the plan is expected to be submitted to a vote of creditors and shareholders in March. An affirmative vote by the requisite majorities would essentially bring to a close the reorganization of LTV, which began when the company filed for Chapter 11 protection in July 1986.
 "We believe the restructuring of our business operations over the past six years and the restructuring of our finances, as provided in the Plan of Reorganization, will provide substantial value to the equity of the new LTV and will permit the post-Chapter 11 company to be competitive and successful," said LTV Chairman and Chief Executive Officer David H. Hoag. "The Plan represents the best way for creditors to maximize their recoveries," he said, "and it preserves, to the extent possible, limited value for equity holders."
 Under the Modified Plan, LTV would emerge from Chapter 11 as the nation's third largest steel company and, through its energy company, one of the largest North American suppliers of products and equipment to the oil and natural gas industry.
 In total, the reorganization plan provides for the resolution of claims totaling nearly $6.0 billion, plus an additional $3.0 billion in pension-related claims. The plan separately recognizes five groups of creditors, including Parent Creditors (claims against the parent corporation) and creditors having claims against each of four operating segments -- steel, aerospace, AM General and energy products.
 The cornerstone of the plan is an agreement with the Pension Benefit Guaranty Corporation (PBGC) under which LTV will satisfy its pension liabilities. The agreement provides for an initial contribution to three steel pension plans of $850 million in cash. The initial contribution will be adjusted to account for interim funding contributed while the company is in Chapter 11 and for the contribution of other cash and non-cash assets which are pledged to the pension plans.
 The remainder of the unfunded liability is to be amortized over the next 28 years. Annual payments will have a fixed component ranging from $30 million to $50 million per year, plus a variable component of at least 50 percent of available cash flow after allowance for capital expenditures.
 The plan provides for a wide range of creditor recoveries and different forms of recovery dependent on the classification of claim. Secured and priority claims will receive 100 percent recoveries paid in cash. General unsecured claims will be paid in new common stock, or a combination of stock, cash and other considerations.
 While recovery percentages will vary according to the value of new common stock issued, estimated average recoveries for unsecured creditors are as follow:
 UNSECURED PARENT STEEL AEROSPACE AM GENERAL ENERGY
 CLASS (pct) (pct) (pct) (pct) (pct)
 Senior 25.4 20.5 57.2 NA NA
 General 16.0 17.3 55.9 43.3 15.0
 Subordinated 8.0 8.6 37.3 NA NA
 Holders of LTV's current common and preferred stocks, together with related claims, will receive Series A warrants valued in aggregate at $5.0 million. The warrants entitle their holders to purchase shares of new LTV common stock over a five-year period at a price to be established six months after reorganization.
 The estimated value of warrants to be received by current shareholders are: 3.22 cents per share of common stock; 42.99 cents per share of Class A Preferred; 5.73 cents per share of Class B Preferred; 21.49 cents per share of Class C Preferred; and 5.38 cents per share of Class D Preferred.
 LTV's existing common and preferred stock will be canceled upon confirmation of the Plan of Reorganization. New common stock to be issued by the company is anticipated by the company's financial advisers to have a value ranging from $15.42 to $19.11 per share. (These estimated values are based on current information and there can be no assurance that the stock will, in fact, trade in this range at the time of distribution.)
 Current estimates are that 73 million to 76 million shares of the new stock will be issued, with 50 million shares distributed to unsecured creditors. Shares valued at $50 million will be purchased by the PBGC, and shares valued at $126 million will be contributed by LTV to the company's steel pension plans. Additional shares will be issued to the LTV Employee Stock Ownership Plan and reserved for issuance to Sumitomo Metal Industries, Ltd., pursuant to conversion rights associated with its investment in LTV.
 A key provision of the reorganization plan is a $200 million investment in LTV, effective upon confirmation, by Sumitomo Metal Industries, Ltd. The investment will consist of $100 million of convertible preferred stock and $100 million of senior secured convertible notes.
 Following confirmation, the reorganized company will have a greatly simplified capital structure. The most significant obligations will be the ongoing costs of steel employee pensions and retiree medical costs. The investment by Sumitomo Metal Industries and two deeply discounted zero coupon notes payable to the PBGC will be the company's only other long-term debt obligations.
 To provide for adequate liquidity, the reorganized company expects to have beginning cash balances of $200 million, and is arranging for working capital financing of $400 million.
 Confirmation of the Plan of Reorganization generally requires that the plan be accepted by each class of creditors. Acceptance entails an affirmative vote by two thirds in amount and more than one half in number of the total claims of those who vote in each creditor class, as well as votes representing two thirds of each stock issue.
 Types of Assets to be Distributed to Creditors
 Cash will be distributed to the pension plans, secured and priority creditors and, as part of their recovery, to Aerospace and AM General creditors.
 New Common Stock will be the principal form of recovery for unsecured creditors. The parent and steel creditor groups will receive stock on a parity basis, based on each group's estimated claim amounts. LTV's investment bankers estimate the value of the new common stock will rage from approximately $1.1 billion to $1.3 billion on a "fully distributed" basis. In addition to shares to be sold to the PBGC and those contributed to the pension plans and employee stock ownership plan, the company expects to issue 50 million shares for distribution to unsecured creditors. The fully distributed value per share is estimated to be from $15.42 to $19.11.
 Contingent Value Rights (CVRs) will be distributed by the PBGC to some unsecured creditors and to the restored pension plans. These rights are being issued by the PBGC and provide for a maximum payment by the PBGC of up to $96.25 million if the new common stock of the company fails to achieve a certain agreed-upon trading value as of six months after the effective date of the plan.
 Stock Appreciation Rights (SARs) will be issued to the PBGC and will entitle the agency to receive additional shares of new LTV common stock under certain conditions whereby the new common stock exceeds an agreed- upon trading value as of one year after the effective date of the plan.
 Series A Warrants will be distributed to some unsecured creditors and to preferred and common equity holders. The warrants will entitle the holders to purchase shares of new LTV common stock at a price equal to 110 percent of the average price of the new stock six months from the effective date.
 Litigation Proceeds from the Lower Lake Erie Iron Ore Antitrust Litigation will be distributed to the pension plans.
 Bar and Warren Trust Assets are comprised of the company's interests in reversionary trusts established in connection with the sale of its Warren steel plant and its steel bar division. Also included are warrants and any amounts to be received on a note due from the bar company. All of these assets are to be contributed to the pension plans, except 20 percent of amounts above $90 million from the Bar trust, which are expected to be distributed to the IRS.
 AMG/Aerospace Assets include all noncash assets received from REN Corporation in connection with the sale of AM General assets and miscellaneous proceeds from various litigation associated with Aerospace.
 Recovery Components For Unsecured Creditors and Other Interests
 Parent Creditors Common stock and warrants valued at $21
 million
 Steel Creditors Common stock and CVRs
 Aerospace Creditors $52 million cash, AMG/Aerospace assets and
 common stock
 AM General Creditors $2.6 million cash and common stock
 Energy Creditors Common stock
 Equity holders Warrants valued at $5 million
 PBGC Zero coupon notes and SARs
 Pension Plans Cash, including the Investment Tax Credit
 refund and Gulf States Steel note
 proceeds; $50 million cash proceeds
 from PBGC stock purchase; all Warren
 and Bar trust assets except 20 percent
 of Bar trust proceeds above $90 million;
 stock contributions; CVRs; all railroad
 antitrust litigation proceeds; and
 future payment commitments.
 LTV Plan of Reorganization
 Estimated Claims and Percentage of Recoveries
 Estimated
 Amount of Estimated Recovery
 Allowed At $15.42 At $19.11
 Claims Stock Price Stock Price
 Class (percent)
 Parent Group
 1.10 Secured Claims $ 0 100.0 100.0
 2.10 Priority & Admin.
 Expense 9,601 100.0 100.0
 3.10 Admin. Convenience 47 50.0 50.0
 4.10 Senior Unsecured
 Claims 565,192 22.8 28.1
 5.10 General Unsecured
 Claims 488,298 14.3 17.7
 7.10 Subordinated Unsecured
 Claims 665,719 7.1 8.8
 Steel Group
 1.20 Secured Claims 287,798 100.0 100.0
 1.26 Tax Benefit Transfer
 Claims 0 100.0 100.0
 1.27 J & L Steel Mortgage 315,325 46.8 49.7
 2.20 Priority & Admin.
 Expense 17,864 100.0 100.0
 3.20 Admin. Convenience 1,554 50.0 50.0
 4.20 Senior Unsecured
 Claims 498,531 18.2 22.8
 5.20 General Unsecured
 Claims 2,045,623 15.4 19.2
 7.20 Subordinated Unsecured
 Claims 175,858 7.7 9.6
 8.20 Other Subordinated
 Unsecured Claims 9,883 7.7 9.6
 Aerospace Group
 2.30 Priority & Admin.
 Expense 3,499 100.0 100.0
 3.30 Admin. Convenience 53 75.0 75.0
 4.30 Senior Unsecured
 Claims 227,047 56.3 58.1
 5.30 General Unsecured
 Claims 3,879 55.0 56.7
 5.32 Special Liability
 Claims 37,718 55.0 56.7
 7.30 Subordinated Unsecured
 Claims 15,986 36.7 37.8
 AM General Group
 1.40 Secured Claims 0 100.0 100.0
 2.40 Priority & Admin.
 Expense 0 100.0 100.0
 3.40 Admin. Convenience 63 75.0 75.0
 5.40 General Unsecured
 Claims 18,908 39.8 46.8
 5.42 Product Tort Liability
 Claims 5,000 39.8 46.8
 Energy Group
 1.50 Secured Claims 8,027 100.0 100.0
 2.50 Priority & Admin.
 Expense 127 100.0 100.0
 3.50 Admin. Convenience 849 50.0 50.0
 5.50 General Unsecured
 Claims 12,487 13.2 16.9
 -0- 1/20/93
 /CONTACT: Mark Tomasch, 216-622-4635; or Charles M. Palmer, 214-979-7941; both of The LTV Corporation/
 (QLTV)


CO: LTV Corporation ST: Ohio IN: MNG SU:

KK -- CL001 -- 6733 01/20/93 08:59 EST
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jan 20, 1993
Words:1925
Previous Article:CCB BOARD CHAIRMAN GEORGE WATTS HILL DIES
Next Article:SPRINT'S NEW SECURITY PROGRAMS DRAMATICALLY SLASHING FRAUD
Topics:


Related Articles
LTV FILES MODIFIED CHAPTER 11 PLAN OF REORGANIZATION
LTV REORGANIZATION PLAN SEEN AS MAJOR STEP FORWARD
LTV PARENT CREDITORS' COMMITTEE ISSUES STATEMENT ON MODIFIED PLAN OF REORGANIZATION
LTV PARENT CREDITORS' COMMITTEE SUPPORTS TERMS OF SECOND MODIFIED PLAN
COURT APPROVES LTV CORPORATION'S REORGANIZATION PLAN DISCLOSURE STATEMENT
LTV REPORTS IMPROVED FIRST QUARTER RESULTS FROM CONTINUING OPERATIONS
LTV PLAN OF REORGANIZATION CONFIRMED BY BANKRUPTCY COURT
LTV EMERGES FROM CHAPTER 11; NYSE APPROVES TRADING OF NEW SHARES
LTV CORPORATION ANNOUNCES COMMON STOCK OFFERINGS
LTV to Reorganize Copperweld.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters