LTV Corp. said yesterday it is seeking relief from a $200 million payment to its steelworkers' retirement fund that is due in six weeks, and briefed federal pension officials on its decision to seek a Chapter 11 bankruptcy reorganization.
Kathleen Utgoff, executive director of the Pension Benefit Guaranty Corp., called the meeting with LTV officials "positive," but said no decisions were made on how to deal with LTV pension obligations to 100,000 current employes and retirees.
Relief from the scheduled $200 million pension payment due in September is one of LTV's first priorities following the filing of its Chapter 11 petition with the U.S. Bankruptcy Court in Manhattan, company officials said. The filing protects LTV from creditors' and suppliers' lawsuits while it develops a plan to reduce its debts, shed losing operations and return to profitability.
The PBGC could permit LTV to waive the $200 million temporarily. LTV also could terminate its plan, turning its obligations over to the PBGC, an employer-funded agency that insures pensions of American workers. But LTV officials said they are not seeking a termination of the plan. Action by the PBGC on LTV's situation could come early next week, a PBGC spokesman said.
Meanwhile, steel industry analysts said LTV's bankruptcy reorganization filing could trigger similar action from other cash-drained competitors later this year.
"I subscribe to the domino theory," said Joseph C. Wyman, a metals industry analyst at Shearson Lehman Bros. Inc. in New York.
With the LTV filing, "It becomes very difficult for others, like Bethlehem Steel, not to go the bankruptcy route. It seems inevitable to me. I think that it's virtually assured," Wyman said.
"I don't think anything is going to stop a major contraction of the steel industry," said Joel Hirschhorn, senior associate with the Congressional Office of Technology Assessment. "I think further bankruptcies are almost inevitable."
Domestic steel product prices -- driven down by imports -- are now as much as $15 a ton under production costs, despite significant increases in manufacturing efficiency. The domestic steel market remains flooded with imports, which accounted for 22.6 percent of the market in the first five months of this year, according to the American Iron and Steel Institute.
Overall steel consumption is down, further increasing pricing pressures. And the industry's raw-steel production capacity of 127.9 million net tons annually is still too weighty for good fiscal health, the analysts said.
"If we believe the economic forecasts, it's going to have to be a smaller industry," said Robert W. Crandall, a senior fellow at the Brookings Institution and coauthor of a forthcoming book on the industry.
If LTV is able to use the bankruptcy to lower its costs dramatically -- by reducing its pension costs, for example -- it could force other companies to follow suit.
Spokesmen for Bethlehem Steel Corp. and Armco Inc., regarded by analysts as the two most vulnerable steel makers after LTV, yesterday said that their companies are concerned about LTV's bankruptcy filing. But they said that they currently have no reason to believe that they soon will be following LTV down the same path.
The outcome of the LTV bankruptcy petition, filed in New York, "could have ramifications in both directions, positive and negative, depending on its resolution," an Armco spokesman said. "We're still evaluating the situation," he said.
Bethlehem, which lost $92 million in the first quarter of this year, also is reevaluating its situation, officials said. Bethlehem is the third-largest steel maker after USX Corp. and LTV's steel subsidiaries.
According to its bankruptcy petition, LTV owes Bethlehem $1.6 million, making it one of LTV's 20 largest unsecured creditors.
In a related development yesterday, Cyprus Minerals Co. of Denver, which supplies metallurgical coal to LTV, said that it is negotiating with the steel maker to save several long-term contracts that are responsible for a major portion of Cyprus' income.
Two-thirds of Cyprus' net income for the first six months of 1986 came from doing business with LTV; the company said that the steel maker currently owes it $18 million for shipments of coal made before the bankruptcy filing.