By THOMAS J. SHEERAN, Associated Press Writer
CLEVELAND (AP) - LTV Corp. said Wednesday it is idling steel production at its mills, citing a lack of demand for its steel, but has no plans to shut down the mills.
LTV will keep its production lines operational until a bankruptcy court judge rules on the company's request to close its mills and get them ready for sale, said spokesman Mark Tomasch. A hearing was scheduled for Tuesday in bankruptcy court in Youngstown.
Tomasch said that over the next few days the company will start cutting off the production of iron, which is the first step in producing steel, because there are no customers for LTV's steel.
The existing iron stocks will work through the system and then steel production will stop at the mills, Tomasch said.
Production could resume immediately if there's demand for LTV's steel, he said.
The company's promise to maintain the mills came in response to allegations that LTV was planning to close the mills before getting a court's permission to do so.
U.S. Rep. Dennis Kucinich, D-Ohio, said he plans to ask the bankruptcy court to issue an injunction preventing LTV from closing the mills.
LTV declared bankruptcy in December and has asked the court for permission to shut down its mills in Cleveland, Hennepin, Ill., and East Chicago, Ind., and begin selling its assets.
Meanwhile, negotiators for the United Steelworkers of America and LTV Steel's unsecured creditors have reached agreement on a revamped contract meant to set up a way to save the bankrupt company with a $250 million federally guaranteed loan.
LTV announced last week that under its existing agreement with labor, it could no longer afford to operate.
The union said the deal proposes $150 million in savings by hourly and salaried workers at LTV. Unsecured creditors said the agreement could provide up to $350 million in savings over four years.
The revised contract includes wage cuts, delayed pay increases and health care savings, according to the union.
Leo W. Gerard, president of the international union, said he is confident the agreement "will satisfy the concerns of lenders and clear the way" for the federal loan.
The Plain Dealer reported Wednesday that according to a union statement and a source familiar with the talks, the new agreement would increase the Steelworkers' share of post-bankruptcy stock ownership, set at 20 percent in the earlier contract revision, to 35 percent, effective once the company returns to profitability.
LTV has said it needs savings of more than $800 million over five years, on top of previous savings, to satisfy its lenders and the federal loan board that it had a chance of paying back loaned money.
The union-creditor proposal also has been submitted to National City and KeyCorp, the primary banks expected to provide loans to LTV. They would have to sign off on it before it could go to a federal loan guarantee board for a federal promise to cover any losses incurred by private lenders in the LTV bailout.
In August, the steelworkers union approved a new contract with LTV that cut labor costs in an attempt to save the company. The agreement covered 9,000 LTV Steel employees, including 3,200 in northeast Ohio.
The specific terms of the revised contract with the unsecured creditors, which included most of LTV's suppliers, will be withheld until a ratification vote can be held. No date for the vote has been set, said union spokesman Marco Trbovich.
Unsecured creditors include those owed money by LTV from before the original bankruptcy court filing 11 months ago. They would be paid after secured creditors, which loaned money more recently and have property and land as collateral.
The company responded cautiously to the agreement.
"We have received a copy of the proposed agreement. At this point we are evaluating the terms of that agreement to see if it provides the economic benefits needed by the company," Tomasch said.