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PROSPECTUS
Filed Pursuant To Rule 424(b)(3)
Registration No. 333-93903
[LTV Logo]
THE LTV CORPORATION
OFFER TO EXCHANGE ALL OUTSTANDING
11 3/4% SENIOR NOTES DUE 2009
FOR
11 3/4% SENIOR EXCHANGE NOTES DUE 2009
-------------------------
We are offering to exchange up to $275,000,000 of our new 11 3/4% Senior
Exchange Notes due 2009 for up to $275,000,000 of our outstanding 11 3/4% Senior
Notes due 2009. The terms of the new notes are identical in all material
respects to the terms of the old notes, except that the new notes have been
registered under the Securities Act and the transfer restrictions and
registration rights relating to the old notes do not apply to the new notes.
We do not intend to list the new notes on any national securities exchange
or NASDAQ.
To exchange your old notes for new notes:
- you must complete and send the letter of transmittal that accompanies
this prospectus to the exchange agent, U.S. Bank Trust National
Association, by 5:00 p.m., New York time, on May 2, 2000
- if your old notes are held in book-entry form at The Depository Trust
Company, you must instruct DTC, through your signed letter of
transmittal, that you wish to exchange your old notes for new notes. When
the exchange offer closes, your DTC account will be changed to reflect
your exchange of old notes for new notes
- you should read the section called "The Exchange Offer" for further
information on how to exchange your old notes for new notes
SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF RISK FACTORS
THAT YOU SHOULD CONSIDER PRIOR TO TENDERING YOUR OLD NOTES IN THE EXCHANGE
OFFER.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the new notes to be issued in the
exchange offer or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
The date of this prospectus is March 30, 2000.
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PROSPECTUS SUMMARY
The following summary contains basic information about this offering. It
may not contain all the information that is important to you in making your
investment decision. Therefore, you should read the entire document and the
financial statements and other information incorporated by reference to LTV's
1999 Annual Report on Form 10-K carefully. The "Description of Notes" section of
this prospectus beginning on page 34 contains more detailed information
regarding the terms and conditions of the notes.
LTV
OVERVIEW
LTV is a leading North American producer of flat rolled steel and
steel-related products such as pipe, tubing and pre-engineered metal buildings.
Based on 1998 shipments, we are the third largest North American integrated
steel producer, the second largest producer of flat rolled steel and a leading
supplier of flat rolled steel to the automotive, appliance and electrical
equipment and service center industries in the United States. We believe that,
with our 1999 acquisitions of Welded Tube Company, Copperweld Corporation and
Copperweld Canada, Inc., we are the largest producer of mechanical and
structural steel tubing products in North America. We are also the second
largest manufacturer of pre-engineered metal buildings systems in North America.
We operate two integrated steel mills, Cleveland Works and Indiana Harbor Works,
various steel finishing and processing facilities and numerous tubular and metal
buildings operations.
Our principal executive offices are located at 200 Public Square,
Cleveland, Ohio 44114. Our telephone number is (216) 622-5000.
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THE EXCHANGE OFFER
Securities Offered.............. Up to $275,000,000 aggregate principal
amount of 11 3/4% Senior Exchange Notes due
2009.
The Exchange Offer.............. We are offering to issue the new notes in
exchange for a like principal amount of
your old notes. We are offering to issue
the new notes to satisfy our obligations
contained in the registration rights
agreement entered into when the old notes
were sold in transactions permitted by Rule
144A and Regulation S under the Securities
Act and therefore not registered with the
SEC.
Tenders, Expiration Date,
Withdrawal...................... The exchange offer will expire at 5:00 p.m.
New York City time on May 2, 2000 unless it
is extended. If you decide to exchange your
old notes for new notes, you must
acknowledge that you are not engaging in,
and do not intend to engage in, a
distribution of the new notes. If you
decide to tender your old notes in the
exchange offer, you may withdraw them at
any time on or prior to May 2, 2000. If we
decide for any reason not to accept any old
notes for exchange, your old notes will be
returned to you without expense promptly
after the exchange offer expires.
Federal Income Tax
Consequences.................... Your exchange of old notes for new notes in
the exchange offer will not result in any
income, gain or loss to you for Federal
income tax purposes. See "Material United
States Tax Consequences of the Exchange
Offer."
Use of Proceeds................. We will not receive any proceeds from the
issuance of the new notes in the exchange
offer.
Exchange Agent.................. U.S. Bank Trust National Association is the
exchange agent for the exchange offer.
Failure to Tender Your Old
Notes........................... If you fail to tender your old notes in the
exchange offer, you will not have any
further rights under the registration
rights agreement, including any right to
require us to register your old notes or to
pay you liquidated damages.
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SUMMARY DESCRIPTION OF THE NOTES
The terms of the new notes and the old notes are identical in all material
respects, except that the new notes have been registered under the Securities
Act, and the transfer restrictions and registration rights relating to old notes
do not apply to the new notes.
Issuer.......................... The LTV Corporation.
Notes........................... $275,000,000 aggregate principal amount of
11 3/4% Senior Notes due 2009. The old
notes were issued and the new notes will be
issued under an indenture that provides for
the issuance of an unlimited amount of
additional notes, subject to compliance
with the terms of the indenture and our
other debt instruments. Any of the
additional notes will be identical in all
respects to the notes, except for issue
price and issuance date, and will vote with
the notes as a single series.
Maturity Date................... November 15, 2009.
Interest Payment Dates.......... May 15 and November 15 of each year,
commencing May 15, 2000.
Guarantors...................... The notes will be unconditionally
guaranteed on an unsecured basis by each of
our existing and future domestic
wholly-owned subsidiaries except particular
unrestricted subsidiaries and special
purpose subsidiaries established to
facilitate our working capital facilities.
Ranking......................... The notes will be senior unsecured
obligations. The notes will rank equally in
right of payment with all our existing and
future unsecured senior debt, including our
existing 8.20% Senior Notes due 2007, which
we refer to as our 1997 notes, and will be
senior in right of payment to all our
future subordinated debt.
The guarantees provided by Welded Tube, the
Copperweld Corporation and their
subsidiaries that are guarantors are
unsecured obligations subordinated to the
guarantees provided by these companies
under the bank financing into which we
entered in connection with the
acquisitions. The guarantees will be equal
in right of payment with the guarantors'
other existing and future senior unsecured
obligations, other than those under our
bank financing. The guarantees provided by
each of the other guarantors and any of
their subsidiaries that become guarantors
will be senior unsecured obligations of the
guarantors, will be equal in right of
payment with their respective other
existing and
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future senior unsecured obligations, and
will be senior in right of payment to any
of their future subordinated debt.
The notes and the guarantees will be
effectively subordinated to (1) all of our
and the guarantors' secured debt, including
debt under our bank financing, and other
obligations to the extent
of the value of the assets securing the
debt and other obligations; and (2) to the
obligations of each of our subsidiaries
that is not a guarantor, to the extent of
these subsidiaries' assets. As of December
31, 1999:
- our total balance sheet liabilities were
approximately $4.6 billion;
- our total secured liabilities, excluding
the contingent obligations under the $250
million United Steel Workers of America
lien, together with those of the
guarantors, were approximately $552
million; and
- the total liabilities of our subsidiaries
that are not guarantors were
approximately $435 million, excluding
intercompany indebtedness.
As of December 31, 1999, we and the
guarantors had approximately $91 million of
outstanding secured letters of credit and
approximately $90 million of additional
available borrowing capacity under our
existing working capital facilities. See
"Description of Notes -- Ranking."
Optional Redemption............. We may not redeem the notes prior to
November 15, 2004, except as set forth
below. On or after November 15, 2004, we
may, at our option, redeem the notes in
whole or in part, in cash, at any time at
the redemption prices set forth under
"Description of Notes -- Optional
Redemption," together with accrued and
unpaid interest, if any, to the redemption
date.
In addition, at our option, up to 35% of
the aggregate principal amount of the notes
originally issued may be redeemed prior to
November 15, 2002 at a price of 111.750% of
their principal amount, together with
accrued and unpaid interest, if any, to the
redemption date, with the net proceeds of
one or more public equity offerings;
provided that at least 65% of the principal
amount of the notes originally issued
remains outstanding
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following the redemption. See "Description
of Notes -- Optional Redemption."
Change of Control............... Upon the occurrence of a change of control,
as defined in the indenture, you will,
subject to limitations described in this
prospectus, have the right to require us to
repurchase all or a portion of your notes
at a cash purchase price equal to 101% of
the principal amount, plus accrued and
unpaid interest, if any, to the repurchase
date. There can be no assurance that
sufficient funds will be available when
necessary to make any required repurchases.
See "Description of Notes -- Repurchase at
the Option of Holders Upon a Change of
Control."
Certain Covenants............... The terms of the notes will limit our
ability and the ability of our restricted
subsidiaries to, among other things:
- incur additional indebtedness;
- make any dividend or other distributions
with respect to our capital stock or
purchase, redeem or retire our capital
stock;
- create liens;
- in the case of our restricted
subsidiaries, create or permit to exist
dividend or payment restrictions with
respect to us;
- consolidate, merge or transfer all or
substantially all our assets or the
assets of LTV Steel or our tubular
business;
- sell assets; and
- transact business with our affiliates.
All of these limitations will be subject to
a number of important qualifications,
including the elimination of particular
covenants, if we obtain an investment grade
rating for the notes. See "Description of
Notes -- Certain Covenants."
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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION AND
CERTAIN OPERATING DATA OF THE LTV CORPORATION
The following table sets forth for the periods indicated summary
consolidated financial data for The LTV Corporation. The historical consolidated
financial data for the years ended December 31, 1999, 1998 and 1997 are derived
from audited financial statements. The audited financial statements are
incorporated by reference to our Annual Report on Form 10-K for the fiscal year
ended December 31, 1999 and should be read in conjunction with this summary. The
pro forma summary combined financial data is derived from the Unaudited Pro
Forma Condensed Combined Statement of Operations contained elsewhere in this
prospectus. A pro forma balance sheet is not presented because the acquisitions
have already occurred and are reflected in LTV's audited historical December 31,
1999 balance sheet.
The principal pro forma adjustments reflected in the data presented below
include (1) the issuance of $715 million of debt and $80 million of convertible
preferred stock to finance the acquisitions of Welded Tube Co. of America and
Copperweld Corporation and Copperweld Canada Inc. as if they had occurred as of
January 1, 1999, and the related increased interest expense and preferred
dividends, (2) reduction of debt not assumed by LTV in these acquisitions and
the related decrease in interest expense, (3) adjustments of the net assets of
Welded Tube and Copperweld to estimated fair values, (4) the excess of
acquisition cost over the fair value of net assets acquired ("goodwill") and
related amortization and (5) the incremental tax effects of the pro forma
adjustments.
In the table below, Adjusted EBITDA reflects the calculation in the manner
required by the indenture for the notes and the 1997 notes. Adjusted EBITDA
essentially represents income (loss) before taxes on income, interest expense
and depreciation and amortization, with elimination of non-cash special charges
and credits and income on non-wholly owned subsidiaries not dividended to LTV.
We believe that Adjusted EBITDA provides useful information regarding our
ability to service our debt and other obligations; however, Adjusted EBITDA does
not represent cash flow from operations as defined by generally accepted
accounting principles and should not be considered as a substitute for net
income as an indicator of our operating performance or a substitute for cash
flow as a measure of liquidity. Such cash flows are also presented in the table
below. In addition, our calculation of Adjusted EBITDA may be different from the
calculation used by our competitors, and therefore comparability may be
affected.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
PRO FORMA
AS ADJUSTED LTV HISTORICAL
----------- --------------------------
1999 1999 1998 1997
----------- ------ ------ ------
(IN MILLIONS, EXCEPT RATIO DATA)
<S> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Sales................................... $4,828 $4,120 $4,273 $4,446
Operating income (loss) (a)............. (158) (191) (47) 27
Interest expense (b).................... 88 30 3 3
Income (loss) before income taxes....... (234) (209) (24) 69
Net income (loss) (c)................... (243) (212) (27) 30
</TABLE>
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<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
PRO FORMA
AS ADJUSTED LTV HISTORICAL
----------- --------------------------
1999 1999 1998 1997
----------- ------ ------ ------
(IN MILLIONS, EXCEPT RATIO DATA)
<S> <C> <C> <C> <C>
OTHER FINANCIAL DATA:
Special charges (a)..................... $ 39 $ 39 $ 55 $ 150
Cash provided by (used in):
Operating activities.................. 31 18 310 336
Investing activities.................. (977) (929) (297) (384)
Financing activities.................. 871 882 (72) 101
Capital expenditures.................... 340 290 362 326
Depreciation and amortization........... 314 274 259 263
Adjusted EBITDA......................... 226 153 325 503
Ratio of Adjusted EBITDA to interest
expense............................... 2.2x 3.4x 9.6x 22.9x
Ratio of earnings to fixed charges
(d)................................... - - 1.0x 2.8x
Ratio of earnings to combined fixed
charges and preferred dividends (e)... - - 1.0x 2.5x
</TABLE>
- -------------------------
(a) Special charges are included in operating income (loss). In 1999 we recorded
a special charge of $39 million for the suspension of a pilot business
systems project being installed at our Hennepin, Illinois plant and a
salaried work force reduction. In 1998, we recorded a $55 million special
charge for the closure of a finishing facility at the Cleveland Works,
recognition of an asset impairment of an electrogalvanizing joint venture of
which we own 50%, a shutdown of a production line for electric-weld pipe and
a salaried force reduction. In 1997, we recorded a special charge of $150
million for the shutdown of the Pittsburgh coke plant.
(b) Net of capitalized interest of $15 million for the year ended December 31,
1999, pro forma as adjusted, and $15 million, $31 million and $19 million
for the years ended December 31, 1999, 1998 and 1997, respectively.
(c) In 1997, we recognized a cumulative effect change in accounting principle
adjustment of $7 million, net of income taxes of $4 million and an
extraordinary charge of $4 million, for the premium paid for the early
redemption of $100 million principal amount of Senior Secured Convertible
Notes due 2003.
(d) This ratio is determined by dividing the sum of earnings from continuing
operations before extraordinary items, interest expense, taxes and the
portion of rent expense representative of interest, by the sum of interest
expense (including capitalized interest) and the portion of rent expense
representative of interest. Earnings were insufficient to cover fixed
charges for the year ended December 31, 1999, pro forma as adjusted, by $209
million and for the year ended December 31, 1999 by $184 million.
(e) Earnings were insufficient to cover the combined fixed charges and preferred
dividends for the year ended December 31, 1999, pro forma as adjusted, by
$218 million, and for the year ended December 31, 1999 by $187 million.
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RISK FACTORS
In addition to other matters described in this prospectus, you should
carefully consider the following risk factors.
RISK FACTORS RELATING TO THE NOTES
SUBORDINATION: YOUR RIGHTS TO RECEIVE PAYMENT ON THE NOTES WILL BE JUNIOR TO
MANY OTHER OBLIGATIONS
Your claim as a note holder and in respect of each guarantee will be junior
to that of many other claims.
First, the notes will not be guaranteed by each of our subsidiaries, and in
any bankruptcy or insolvency, your claim as a noteholder on any non-guarantor
subsidiary will effectively be that of an equity claimant, and all obligations
of those non-guarantor subsidiaries will be entitled to receive payment in full
before any amounts are made available to pay the other obligations of LTV and
its subsidiaries. As of December 31, 1999, the total liabilities of our
non-guarantor subsidiaries was approximately $435 million excluding intercompany
indebtedness.
Second, the guarantees provided by Welded Tube, the Copperweld Corporation
and their subsidiaries that become guarantors will be contractually subordinated
to the guarantees provided by those companies under our bank financing. As a
result, payment on those guarantees will be junior to payment by those
subsidiaries of their obligations under our bank financing, which had an
aggregate outstanding principal amount of $225 million as of December 31, 1999.
Third, the notes and the guarantees will also be effectively subordinated
to any of our and any of the guarantors' secured debt and other obligations, to
the extent of the value of the assets securing the debt and other obligations.
As of December 31, 1999, we and the guarantors had approximately $552 million of
secured debt or other secured obligations outstanding, excluding the contingent
obligations under the $250 million United Steel Workers of America lien. These
obligations include approximately $115 million under our inventory financing,
which are secured by much of our steel inventory, $205 million under our
accounts receivables financing, which are secured by our accounts receivable for
steel, and our new bank financing, which is secured by mortgages and liens on
physical property and stock of Copperweld, Welded Tube and the other entities
conducting our tubular products business. Some of these obligations are also
obligations of non-guarantor subsidiaries or obligations under our bank
financing.
Upon the sale or other disposition of any guarantor or the sale or
disposition of all or substantially all of that guarantor's assets as permitted
by the indenture, the guarantor will be released from all its obligations under
the guarantee.
WE MAY BE UNABLE TO PURCHASE THE NOTES UPON A CHANGE OF CONTROL
Upon particular change of control events, we would be required to offer to
purchase the notes in cash at a price equal to 101% of their aggregate principal
amount plus accrued and unpaid interest, if any. We may not have the financial
resources necessary to repurchase the notes and satisfy other payment
obligations that could be triggered upon a change of control.
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A change of control under the terms of the notes will constitute an event
of default under our bank financing and will trigger a similar repurchase
obligation under the terms of our 1997 notes. Debt that we incur in the future
may contain similar provisions, or may require repurchase upon a change of
control. If a change of control were to occur and cause an event of default
under our bank financing and other debt, the lenders under those facilities
would have the right to declare their debt immediately due and payable,
increasing the needs we would have for cash to repay affected obligations. See
"Description of Notes -- Repurchase at the Option of Holders Upon a Change of
Control."
If we do not have sufficient financial resources to effect a change of
control offer, we would be required to seek additional financing from outside
sources to repurchase the notes. There can be no assurance that financing would
be available to us on satisfactory terms. If we fail to pay the purchase price
with respect to a change of control offer, you would have the rights described
under "Description of Notes -- Events of Default."
THERE IS NO PUBLIC TRADING MARKET FOR THE NOTES; THE OLD NOTES CONTAIN
RESTRICTIONS ON TRANSFER
There is no established trading market for the notes and an active or
liquid trading market for the notes may not develop. If a trading market does
develop, the notes may trade at a discount from their initial offering price,
depending upon prevailing interest rates, the market for similar securities, our
financial condition and results of operations and some other factors. Although
we expect the notes to be eligible for trading in The PORTAL Market of The
Nasdaq Stock Market, Inc., we do not intend to list the notes on any securities
exchange or to arrange for them to be quoted on the Nasdaq National Market or
any other quotation system.
We offered and sold the old notes in a private offering exempt from
registration requirements of the Securities Act. Holders of old notes who do not
exchange their old notes for new notes pursuant to the exchange offer will
continue to be subject to the restrictions on transfer of the old notes as set
forth in the legend on the old notes. In general, the old notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from or in a transaction not subject to, the Securities Act and
applicable state securities laws. We do not intend to register the old notes
under the Securities Act.
FRAUDULENT CONVEYANCE: FEDERAL AND STATE STATUTES COULD ALLOW COURTS, UNDER
SPECIFIC CIRCUMSTANCES, TO VOID GUARANTEES AND REQUIRE NOTEHOLDERS TO RETURN
PAYMENTS RECEIVED FROM GUARANTORS
Under federal and state fraudulent transfer laws, a court could void a
noteholder's claim under any guarantee or subordinate that claim on the
guarantee to the relevant guarantor's other obligations if, among other things,
the relevant guarantor:
- issued the guarantee with the intent of hindering, delaying or defrauding
current or future creditors; or
- received less than fair consideration or reasonably equivalent value for
incurring the indebtedness represented by its guarantee; and
- either (1) was insolvent or was rendered insolvent by reason of the
issuance of the guarantee; (2) was engaged, or about to engage, in a
business or transaction for which
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its assets were unreasonably small; or (3) intended to incur, or believed
or should have believed it would incur, debts beyond its ability to pay
as those debts mature.
In that event, you might not receive any payment under the guarantee of the
applicable guarantor. If any guarantee were not enforceable, assets of the
affected guarantor would be available for obligations under the notes only after
payment of all liabilities of that guarantor.
Different jurisdictions define "insolvency" differently. However, an entity
generally would be considered insolvent at the time it incurred any particular
obligation if:
- its liabilities exceeded the fair saleable value of its assets, or
- the present saleable value of its assets is less than the amount required
to pay its total existing debts and liabilities (including the probable
liability related to contingent liabilities) as they become absolute or
matured, or
- it could not pay its debts as they become due.
LEVERAGE: OUR SUBSTANTIAL DEBT AND OTHER OBLIGATIONS MAY IMPAIR OUR ABILITY TO
REPAY THE NOTES AND ADVERSELY AFFECT US
We have substantial debt and other obligations, which will affect our
business in may ways, including the following:
- we will use a significant portion of our cash flow from our operations to
service our debts and fund our pension and other postemployment benefit
obligations, which will reduce cash available for other purposes;
- we may not have or be able to obtain sufficient cash, whether from
operations or through new financings, to make capital expenditures, new
investments and acquisitions;
- the covenants in our debt agreements will limit our ability to make new
investments and acquisitions and obtain new financing and otherwise
restrict the way in which we operate our business,
- our debt agreements also contain financial covenant compliance which is
in part beyond our control; if we are unable to comply with these
covenants and creditors accelerated the maturity of those debts, it is
unlikely we would be able to pay them when required; and
- our ability to adjust to changing market conditions and competition may
be limited by the amount of fixed obligations, and we may be more
vulnerable to fluctuations in market conditions than some of our
competitors.
As of December 31, 1999, our total consolidated debt, pension and other
postemployment health care and insurance benefit liabilities were approximately
$3.4 billion, excluding approximately $91 million of outstanding letters of
credit. In addition, we could incur approximately $300 million of additional
debt under the indenture for the notes based on our financial results through
December 31, 1999, assuming an interest rate on the additional debt of 10%, and
approximately $490 million under additional exceptions contained in the
indenture, including approximately $90 million of available borrowing capacity
under our existing working capital facilities. We expect that the financial
covenants in our new bank financing will prohibit us from incurring much of this
additional debt, but these financial
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covenants will not begin to be calculated until March 31, 2000. Under the
indenture, we would also be able to declare approximately $65 million in the
aggregate in distributions on our capital stock based upon our results of
operations through December 31, 1999.
Our debt service for 1999 was approximately $45 million, and would have
been approximately $111 million on a pro forma basis assuming that our debt at
December 31, 1999 had been outstanding for all of 1999 at interest rates
prevailing on December 31, 1999. Our annual expense for pensions and other
postemployment benefit obligations was approximately $163 million for 1999,
which we believe is currently higher on a per-ton-shipped basis than that of
some other domestic integrated steel producers that publicly report this data.
Cash obligations include (1) postemployment health care and other insurance
benefits and (2) required contributions to a Voluntary Employees' Beneficiary
Association Trust to prefund postemployment health care and other insurance
benefits. The amount of these expenses depends on a variety of factors and, in
particular, could increase if:
- we become subject to new federal legislation changing our postemployment
benefit and pension-related obligations or increasing our annual cash
flow requirements related to current pension funding requirements or
pension insurance premiums;
- the actual retirement or other termination of active employees is
significantly earlier than projected; or
- any of our obligations are modified after August 2004 because of
contractual changes with the USWA.
OUR DEBT AGREEMENTS HAVE RESTRICTIVE COVENANTS THAT MAY ADVERSELY AFFECT OUR
BUSINESS. IF WE ARE UNABLE TO COMPLY WITH THESE COVENANTS, OUR CREDITORS COULD
ACCELERATE THE MATURITY OF OUR DEBT OBLIGATIONS.
The indentures governing the notes and our 1997 notes and our other
financing agreements contain covenants that limit our ability to engage in
transactions that might otherwise be beneficial to us and to our ability to
generate cash from operations or other sources to continue to make payments on
the notes. Our bank financing also contains restrictive covenants, including
requirements to maintain specific financial ratios and satisfy other financial
tests. Our ability to meet those financial ratios and tests can be affected by
events beyond our control, and we may not be able to meet them.
The breach of a covenant or the occurrence of a default under our bank
financing or our other financing arrangements would permit the relevant
creditors to declare all outstanding amounts under that facility immediately due
and payable and terminate all commitments to extend further credit. It is
unlikely that we would have sufficient assets to repay our debts, if those
obligations were accelerated.
RISK FACTORS RELATING TO LTV
WE MAY NOT BE ABLE TO SATISFY THE SUBSTANTIAL CAPITAL INVESTMENT AND MAINTENANCE
REQUIREMENTS OF RUNNING OUR BUSINESS
Our integrated steel operations are capital intensive. We might not have
adequate funds to make all capital expenditures that we might find desirable, or
even to preserve our competitive position or comply with environmental
regulations. If we do not, our business may be impaired and our profitability
reduced. Over the last ten years, our consolidated
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capital expenditures have totaled approximately $3 billion and over the last
three years, our consolidated capital expenditures have totaled approximately
$978 million.
WE MAY NOT BE ABLE TO ACHIEVE THE EXPECTED BENEFITS FROM THE TUBULAR BUSINESS
ACQUISITIONS
We expect that our combination of the LTV Tubular, Welded Tube and
Copperweld businesses will provide us operating advantages and cost savings that
will more than compensate for the costs of combining those businesses. Our cash
flow and profitability would be diminished if we were unable to achieve those
advantages and savings, making it more difficult for us to service our
obligations including the notes. The integration and consolidation of two or
more businesses requires substantial management time and other resources, and
the combined entity is not always more successful than the businesses would have
been if they had remained independent. For example, we could find it difficult
to combine three management teams, coordinate production schedules and
coordinate production and administrative services for the combined operations.
OUR DIVERSIFICATION STRATEGIES MAY NOT BE SUCCESSFUL, AND WE COULD SUFFER LOSSES
FROM NEW OR EXISTING INVESTMENTS
Our recent expansion and continuing efforts to diversify our business
exposes us to risk of loss from new investment. We have recently expanded beyond
our existing integrated steel operations, and expect to continue to diversify
our business by investing in our metal fabrication business and making
additional steel-related investments. In particular, we have expanded our
operations in part through joint venture investments and expect to continue to
make similar investments. There are a number of risks associated with joint
ventures, including the risks that our venture partners may:
- have economic or business interests that are inconsistent with our
interests; or
- be unable to meet their economic or other obligations and we may be
required or choose to fulfill those obligations.
In addition, many of the opportunities we are pursuing are, or have
investments in, start-up operations and may require significant additional
investments before becoming operational. The development, construction and
start-up of these operations are subject to numerous risks. Cliffs and
Associates, for example, our 46.5% owned joint venture to produce reduced iron
briquettes, has experienced some difficulties in start-up that, although being
addressed, have caused some delays in its full operation. After start-up of
these operations, we may be required to make further investments and we could
incur significant losses before any profits are realized. For example, Trico
Steel, our 50% owned mini-mill operation, has experienced substantial equipment
problems, including but not limited to transformer outages, that have prevented
it from reaching satisfactory levels of performance. Further, assuming these
equipment problems can be fully resolved, additional capital expenditures may be
required to permit Trico Steel to operate at a level that makes our investment
in it profitable, and there can be no assurance that Trico Steel would have the
funds necessary to make these expenditures.
WE COULD BE FORCED TO SELL OUR TRICO STEEL JOINT VENTURE INVESTMENT AT A LOSS
We could be forced to sell our investment in Trico Steel on an expedited
schedule. We could suffer a substantial loss on our sale if we are unable to
sell on a schedule that allows
13
<PAGE> 14
us to realize the highest available price for our investment, which we reflect
in our December 31, 1999 consolidated financial statements at $152 million. In
our new labor agreement with the USWA, we have agreed to cause Trico Steel to
enter into a neutrality agreement with the USWA with respect to efforts to
organize Trico employees or, if we have not done so by August 1, 2000, to
expeditiously exit from our Trico Steel investment. Because we own only a 50%
interest in Trico Steel, we are unable unilaterally to ensure that Trico Steel
undertakes these steps, and we may therefore be required to divest our Trico
Steel investment. We are presently in discussions with our Trico Steel partners
regarding Trico Steel neutrality.
WE RELY HEAVILY ON AUTOMOTIVE INDUSTRY CUSTOMERS FOR OUR SALES; ANY LOSS OR
DIMINISHED DEMAND FROM THESE CUSTOMERS COULD ADVERSELY AFFECT OUR BUSINESS
Demand for much of our steel products is affected by, among other things,
the strength or weakness of the automotive industry, and any weakness of demand
from automotive customers could impair our profitability. The automotive
industry can be highly cyclical and is dependent on, among other things,
consumer spending, labor relations and the impact of international trade. Direct
sales of our products to the automotive market accounted for approximately 29%
of our steel-related sales in 1999, 30% in 1998 and 28% in 1997. We also sell to
the steel service center and converter markets which, in turn, sell a portion of
their product to the automotive industry. Direct sales to General Motors
Corporation, our largest customer, accounted for approximately 10% of our
consolidated sales in 1999, 9% in 1998 and 11% in 1997. Our current sales
arrangement with General Motors expires at year-end 2000 and future sales to
General Motors may not continue at these historic levels.
Automotive manufacturers that sell passenger cars and light-duty trucks in
the United States are required to comply with increasingly stringent federally
mandated corporate average fuel economy standards. Increases in fuel economy
standards from their current levels could require vehicle manufacturers to
reduce the average weight of vehicles sold in the United States by reducing the
average amount of steel used in those vehicles. A reduction of the amount of
steel used in a vehicle could result in a reduction of our sales and have a
material adverse effect on our business.
UNPLANNED REPAIRS OR EQUIPMENT OUTAGES COULD INTERRUPT PRODUCTION AND REDUCE
OPERATING INCOME OR CASH FLOW
Our integrated steel operations depend upon critical pieces of steelmaking
equipment, such as blast furnaces and continuous casters, that may occasionally
be out of service due to routine scheduled maintenance or equipment failures.
Any unplanned unavailability of critical equipment would interrupt our
production capabilities and reduce our sales and profitability. Although we have
not recently experienced any equipment failures that have resulted in the
complete shutdown of a major portion of our steelmaking production for a
significant period, we have experienced unscheduled equipment outages in the
past and we could have material shutdowns in the future. We currently have no
plans for equipment shutdowns other than for routine scheduled maintenance in
the ordinary course of business, which we do not expect to have a material
effect on our operations.
14
<PAGE> 15
BECAUSE WE RELY ON NET OPERATING LOSS CARRYFORWARDS TO REDUCE POTENTIAL FUTURE
INCOME TAX LIABILITIES, OUR FINANCING OPTIONS WILL BE LIMITED
We rely on the availability of net operating loss carryforwards to reduce
any future income tax liability. This availability would be lost were we to
undergo an "ownership change" under the Internal Revenue Code of 1986. Our
future ability to issue additional shares of stock or equity-related instruments
convertible into stock may be limited in order to avoid an "ownership change"
and significant impairment to our ability to use our net operating losses to
reduce tax expense. Because we are also limited in the amount of debt financing
that we can undertake, our limitations on raising equity may mean that we are
unable to obtain equity financing even under circumstances where it would
otherwise be an attractive source of financing.
MOST OF OUR EMPLOYEES BELONG TO UNIONS, AND WE MUST PERIODICALLY RENEGOTIATE
LABOR CONTRACTS TO AVOID WORK STOPPAGES
Most of our employees belong to unions, and we accordingly negotiate with
those unions to put in place collective bargaining agreements. Any failure to
reach agreement on new labor agreements when required might result in a work
stoppage that could, depending upon the operations affected and the length of
the work stoppage, have a material adverse effect on our operations.
RISK FACTORS RELATING TO THE STEEL INDUSTRY AND RELATED INDUSTRIES
THE CYCLICALITY OF THE STEEL INDUSTRY MAY MAKE OUR OPERATING RESULTS FLUCTUATE
The domestic steel industry is cyclical due primarily to the cyclicality of
the industries it serves and changes in total industry capacity. Our results of
operations are substantially affected by small variations in the realized prices
of our products; changes in demand can produce significant volatility in our
profitability. For example, our integrated steel operations shipped 7.5 million
tons of integrated steel products and recorded sales of $3.4 billion during
1999. A 1% increase or decrease in the average realized price during 1999 would
have resulted in an increase or decrease in pre-tax income of approximately $30
million.
Steel prices declined materially during 1998 such that our average realized
integrated steel selling prices during 1999 were below those of a decade ago. We
have been unable to implement price increases to offset the price decreases
experienced in 1998. We have suffered losses due to this drop in prices and
there is no assurance that prices will not continue to decline and that we will
not continue to suffer losses.
IMPORTS OF STEEL FROM FOREIGN PRODUCERS HAVE CREATED EXCESS SUPPLY IN THE MARKET
AND DEPRESSED STEEL PRICES
A number of foreign steel producers, particularly those in Asia, Eastern
Europe and Latin America, have recently been exporting large quantities of steel
to the United States at depressed prices, impairing our ability to sell our
products at favorable prices and, accordingly, our profitability. Some foreign
steel producers are owned, controlled or subsidized by foreign governments.
Decisions by these foreign producers to continue production at marginal
facilities may be influenced to a greater degree by political and economic
policy considerations than by prevailing market conditions and may further
contribute to excess global capacity.
15
<PAGE> 16
THE TIN INDUSTRY HAS BEEN SUBJECT TO CONTINUING PRICING PRESSURES, REDUCING THE
PROFITABILITY OF OUR TIN OPERATIONS
The tin industry has been subject to pricing pressure, which has reduced
both our tin sales and the profitability of those tin sales. This is a result of
several factors. First, consolidation of the customer base has left customers
with greater purchasing power. Furthermore, domestic production capacity of tin
product exceeds market demand, which has been declining somewhat due to
increased market penetration by competing materials. Increased imports of tin
mill products in 1999 have also increased supply. Our capacity utilization in
our tin mills was 88% in 1998 and 83% in 1999.
OUR COMPETITION WITH OTHER DOMESTIC PRODUCERS OF STEEL AND STEEL SUBSTITUTES MAY
REDUCE OUR REVENUES FROM STEEL SALES
We face competition from other domestic integrated steel producers, some of
which have greater resources than we do, and from flat rolled mini-mills, which
in many cases have lower costs of production than we do. Mini-mills generally
produce steel from scrap in electric furnaces, have lower employment and
environmental costs and generally target regional markets. Thin slab casting
technologies have allowed some mini-mill producers to enter sectors of the flat
rolled market that have traditionally been supplied by integrated producers. In
the case of many steel products, we compete with manufacturers of other
products, such as plastics, aluminum, ceramics, glass, wood and concrete, all of
which can diminish our sales and profitability.
OUR COSTS OF COMPLIANCE WITH ENVIRONMENTAL REGULATIONS MAY AFFECT OUR
COMPETITIVENESS AND PROFITABILITY
We are subject to laws and regulations relating to the protection of human
health and the environment that are quite stringent and are generally becoming
more stringent. We incur substantial capital and operating costs to comply with
these laws, which puts us at a competitive disadvantage to steel producers that
do not have comparable costs and reduces our cash flow and profitability. In
1999, we spent approximately $18 million in capital expenditures for
compliance-related environmental projects, and we expect that our average annual
capital expenditures for similar environmental projects will be approximately
$24 million over the next five years. If environmental laws and regulations that
affect us or their application were to become more stringent, our costs of
compliance could increase over those expected levels.
RISK FACTORS RELATING TO THE METAL FABRICATION BUSINESS SEGMENT
SIGNIFICANT RECENT INCREASES IN STRUCTURAL TUBING PRODUCTION CAPACITY COULD
CONTINUE TO DEPRESS PRICES
Recent expansion in the structural tubing industry has resulted in
overcapacity and continued pressure on prices, reducing the profitability of our
structural tubing business. New mill capacity in North America has increased
approximately 25% since 1996, and U.S. capacity utilization has been reduced to
below 60%. In addition, producers of tubing for the oil drilling industry or
other related industries may, in response to weakness in their target markets,
attempt to shift more product sales into our target markets until demand for
their core products returns.
16
<PAGE> 17
CYCLICALITY OF DEMAND IN THE TARGET MARKETS OF OUR METAL FABRICATION BUSINESS
COULD PERIODICALLY RESULT IN DECREASED DEMAND AND LOWER PRICES
The target markets of our metal fabrication business, particularly the
non-residential construction market, are cyclical, and decreases in demand could
result in lower sales and prices for our tubular and metal buildings products.
We cannot predict the timing, region or severity of future economic or industry
downturns. A weak agricultural market could also have an adverse effect on the
sales and prices realized by our metal fabrications business. Revenues from the
sale of structural and mechanical tubing segments directly and indirectly to the
agricultural industry would have accounted for approximately 19% of our pro
forma tubular sales for 1999. Demand for these products depends primarily on
strong agricultural yields, price and sales.
OUR BIMETALLICS BUSINESS UNIT RELIES HEAVILY ON ONE CUSTOMER; ANY DECLINE IN
SALES TO THAT CUSTOMER COULD ADVERSELY AFFECT OUR REVENUES IN THAT UNIT
In 1999, CommScope, Inc. accounted for approximately $44 million, or 41% of
Copperweld's bimetallics business unit revenues. The loss of any or all of the
CommScope business could have a material adverse effect on the results of
operations of our metal fabrication business. CommScope and Copperweld are
parties to a multi-year supply agreement that expires in March 2000. In February
1999, CommScope acquired the assets of the only other significant U.S. producer
of bimetallic wire, and as a result will be capable of satisfying a substantial
portion of its needs internally once the relocated equipment is operational.
Because of its ability to provide a portion of its needs through its own
operations, CommScope could decide to decrease its purchases from our
bimetallics business, which would reduce our cash flow and profitability in that
business.
17
<PAGE> 18
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, and in accordance with the Exchange Act, are required to file
reports and other information with the Securities and Exchange Commission. All
reports and other information filed by us with the SEC may be inspected without
charge at the public reference facilities maintained by the SEC at 450 Fifth
Street, NW, Washington, D.C. 20549, and at the regional offices of the SEC
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of the documents can be obtained from the public reference section of the
SEC,
450 Fifth Street, NW, Washington, D.C. 20549, at prescribed rates. Please call
the SEC at
1-800-SEC-0330 for further information on the public reference rooms. The SEC
maintains a web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants, including
us, that file electronically with the SEC. In addition, these reports and other
information concerning us may also be inspected at the offices of the New York
Stock Exchange at 20 Broad Street, New York, New York 10005.
We have filed with the SEC a registration statement on Form S-4 under the
Securities Act with respect to the exchange offer of the new notes. As allowed
by SEC rules, this prospectus does not contain all of the information that you
can find in the registration statement or the exhibits to the registration
statement.
The SEC allows us to "incorporate by reference" the information we file
with the SEC. This permits us to disclose important information to you by
referring to these filed documents. Any information referred to in this way is
considered part of this prospectus, and any information filed with the SEC by us
after the date of this prospectus will automatically be deemed to update and
supersede this information. We incorporate by reference the following documents:
- Annual Report on Form 10-K for the year ended December 31, 1999; and
- Current Report on Form 8-K filed on November 22, 1999, as amended by
Current Report on Form 8-K/A, filed on January 25, 2000.
We also incorporate by reference any future filings made with the SEC
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until the
termination of the offering under this prospectus.
We will provide without charge upon written or oral request, a copy of any
or all of the documents that are incorporated by reference into this prospectus,
other than exhibits which are specifically incorporated by reference into those
documents. Requests should be directed to The LTV Corporation, 200 Public
Square, Cleveland, Ohio, 44114; (216) 622-5631; Attention: Senior Vice
President, General Counsel and Secretary.
TO OBTAIN TIMELY DELIVERY, YOU MUST REQUEST THE INFORMATION NO LATER THAN
FIVE BUSINESS DAYS BEFORE MAY 2, 2000.
While any notes remain outstanding, we will make available, upon request,
to any holder and any prospective purchaser of notes the information pursuant to
Rule 144A(d)(4) under the Securities Act during any period in which we are not
subject to Section 13 or 15(d) of the Exchange Act. Any request for this
information should be directed to our Senior Vice President, General Counsel and
Secretary at 200 Public Square, Cleveland, Ohio 44114-2308, (216) 622-5631. The
indenture requires us to distribute to the registered holders of the notes
18
<PAGE> 19
annual reports containing our audited consolidated financial statements and
quarterly reports containing our unaudited consolidated financial statements for
the first three quarters of each fiscal year.
FORWARD-LOOKING STATEMENTS
Statements we make in this prospectus that are not historical facts
constitute "forward-looking statements" intended to qualify for the safe harbor
from liability established by the Private Securities Litigation Reform Act of
1995. Forward-looking statements can be identified by, among other things, the
use of forward-looking terminology, including "believes," "expects,"
"anticipates," "intends," "pro forma," "estimates" or by discussions of strategy
or intentions. Forward-looking statements, by their nature, involve risk and
uncertainty. A variety of factors could cause business conditions and our actual
results and experience to differ materially from those that we expect and have
expressed in our forward-looking statements. These factors include, but are not
limited to, the following:
- changes in market price or market demand, even if relatively small;
- changes in domestic capacity;
- changes in raw material costs;
- increased environmental and other operating costs;
- loss of business from major customers, especially for high value-added
products;
- unanticipated expenses;
- substantial changes in financial markets;
- labor unrest;
- increased foreign competition;
- major equipment failure;
- unanticipated results in pending legal proceedings; and
- difficulties in implementing information technology, including Year 2000
compliant systems.
The forward-looking statements included in this prospectus are made only as
of the date of this prospectus and we undertake no obligation to publicly update
the forward-looking statements to reflect subsequent events or circumstances.
19
<PAGE> 20
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new notes.
We will cancel all of the old notes surrendered in exchange for the new notes.
20
<PAGE> 21
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
The unaudited pro forma condensed combined statement of operations is
presented for illustrative purposes only, giving effect to the acquisitions of
Welded Tube and Copperweld by LTV. The unaudited pro forma condensed combined
statement of operations gives effect to the Copperweld and Welded Tube
acquisitions as if they had occurred on January 1, 1999. The purchases were
accounted for under the purchase method of accounting whereby the purchase price
is allocated based on the fair value of the assets acquired and the liabilities
assumed. The historical condensed financial statements of the acquisitions are
derived from the nine month historical combined financial statements of
Copperweld Corporation and Copperweld Canada Inc., incorporated by reference in
this prospectus and historical combined financial statements for the period from
October 1, 1999 to November 9, 1999 which are not included herein, and the
historical financial statements of Welded Tube Co. of America incorporated by
reference in this prospectus. The unaudited pro forma condensed combined
statements of operations include the respective financial statements of LTV,
Welded Tube and Copperweld and the respective pro forma adjustments based on
management's assumptions to reflect the combination. Both the audited and
unaudited financial statements, incorporated by reference in this prospectus,
should be read in conjunction with the pro forma combined financial information.
The pro forma results are not necessarily indicative of the results of
operations had these acquisitions taken place at the beginning of the period nor
indicative of future results of the combined companies.
A pro forma balance sheet is not presented because the acquisitions have
already occurred and are reflected in LTV's audited December 31, 1999 balance
sheet.
The principal pro forma adjustments to the condensed combined statement of
operations include (1) elimination of intercompany sales; (2) amortization of
goodwill and other intangibles; (3) elimination of interest on debt not assumed;
(4) interest expense on the new debt issued and dividends on the new preferred
stock issued to finance the acquisitions; and (5) incremental tax effects of the
pro forma adjustments.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
------------------------------------------------
HISTORICAL PRO FORMA AS ADJUSTED
----------------------- ----------------------
LTV ACQUISITIONS ADJUSTMENTS COMBINED
-------- ------------ ----------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Sales.................................. $ 4,120 $738 $(30)(a) $ 4,828
Cost and expenses:
Cost of products sold................ 3,779 622 (30)(a) 4,371
Depreciation and amortization........ 274 26 14(b) 314
Selling, general and
administrative.................... 189 43 232
Results of affiliates' operations.... 30 30
Net interest and other (income)
expense........................... 18 7 51(c) 76
Special charges...................... 39 39
-------- ---- ---- --------
Total........................ 4,329 698 35 5,062
Income (loss) before income taxes...... (209) 40 (65) (234)
Income taxes........................... (3) (14) 8(d) (9)
-------- ---- ---- --------
Net income (loss)...................... (212) 26 (57) (243)
Less: Preferred dividends.............. (3) (6)(e) (9)
-------- ---- ---- --------
Net income (loss) available to common
shareholders......................... $ (215) $ 26 $(63) $ (252)
======== ==== ==== ========
Earnings per share -- basic and fully
diluted.............................. $ (2.15) $ (2.52)
Average shares outstanding (in
thousands)........................... 100,020 100,020
</TABLE>
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<PAGE> 22
- -------------------------
Pro forma adjustments were made to reflect the:
(a) Elimination of intercompany sales from LTV to Copperweld.
(b) Amortization of goodwill and other intangibles of $188 million. The excess
of acquisition cost over the fair value of net assets acquired is being
amortized on a straight-line basis over 35 years, and other intangibles are
being amortized over periods ranging from 5 to 30 years.
(c) Pro forma adjustments to interest expense (assuming particular principal
amounts and rates shown below) after reflecting the acquisitions:
<TABLE>
<CAPTION>
LESS: INTEREST
ANNUAL INCLUDED IN
INTEREST LTV
PRINCIPAL RATE EXPENSE HISTORICAL PRO FORMA
--------- ------- -------- -------------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Notes........................ $275 11.750% $32 $ 5 $27
Bank Financing............... 225 9.995% 22 3 19
Working Capital Facilities... 215 6.716% 14 3 11
---- ------- --- --- ---
Total.............. $715 $68 $11 57
==== === ===
Amortization of financing
fees....................... 2
Less: interest expense on
debt not assumed........... (8)
---
Pro forma total interest
expense adjustment......... $51
===
</TABLE>
(d) Reduction of income taxes relating to the application of LTV's net operating
loss carryforwards to the federal tax provisions of the acquisitions. A full
valuation allowance has been recorded to offset the non-cash tax benefits
arising from the losses in the respective pro forma periods. These
adjustments result in the ending pro forma income tax provision reflecting
only cash taxes that consist of state, foreign and federal taxes including
taxes of a less than 80% owned subsidiary of LTV.
(e) Annual preferred dividends at a rate of 8.25% on $80 million of our new
preferred stock.
22
<PAGE> 23
SELECTED COMBINED FINANCIAL INFORMATION
AND CERTAIN OPERATING DATA OF COPPERWELD
The following table presents selected combined financial information and
other operating data for Copperweld Corporation and Copperweld Canada Inc. for
the periods indicated. The financial information is derived from Copperweld's
audited combined financial statements for each of the years ended December 31,
1998, 1997, 1996, 1995 and 1994. The financial information for the nine months
ended September 30, 1999 and 1998 is derived from Copperweld's unaudited
financial statements. The results of operation for the nine months ended
September 30, 1999 are not necessarily indicative of results for the full year.
The following financial information and operating data should be read in
conjunction with the Combined Financial Statements of Copperweld for the years
ended December 31, 1998, 1997 and 1996 and for the nine months ended September
30, 1999 and 1998 incorporated by reference to LTV's 1999 Annual Report on Form
10-K.
In the table below the ratio of earnings to fixed charges is determined by
dividing the sum of net income before interest expense, taxes and the portion of
rent expense representative of interest, by the sum of interest expense
(including capitalized interest) and the portion of rent expense representative
of interest.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------- ----------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------ ------ ------ ------ ------ ------ ------
(UNAUDITED) (IN MILLIONS, EXCEPT OTHER DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT:
Sales..................... $554.7 $552.6 $711.0 $662.7 $427.8 $429.6 $432.1
Cost of products sold..... 467.3 461.0 594.8 547.1 353.1 355.2 345.2
Depreciation and
amortization............ 22.8 18.1 22.9 19.8 12.8 11.5 12.2
Selling, general and
administrative.......... 30.2 28.6 36.7 38.1 28.7 20.6 25.7
------ ------ ------ ------ ------ ------ ------
Operating income.......... 34.4 44.9 56.6 57.7 33.2 42.3 49.0
Interest expense.......... 7.5 7.2 8.0 8.0 4.5 4.6 4.3
Interest and other
income.................. 0.9 0.7 1.3 0.8 0.5 1.2 1.2
------ ------ ------ ------ ------ ------ ------
Income before taxes on
income.................. 27.8 38.4 49.9 50.5 29.2 38.9 45.9
Provision for income
taxes................... 10.4 14.7 19.1 18.6 9.4 15.1 18.6
------ ------ ------ ------ ------ ------ ------
Net income................ $ 17.4 $ 23.7 $ 30.8 $ 31.9 $ 19.8 $ 23.8 $ 27.3
====== ====== ====== ====== ====== ====== ======
OTHER FINANCIAL DATA:
Capital expenditures...... $ 30.7 $ 52.2 $ 83.2 $ 30.8 $ 10.2 $ 20.8 $ 11.2
Depreciation and
amortization............ 22.8 18.1 22.9 19.8 12.8 11.5 12.2
Cash provided by (used
in):
Operating activities.... 44.3 82.9 54.0 34.4 28.8 42.4 25.7
Investing activities.... (31.0) (56.6) (87.7) (128.6) (7.6) (25.3) (10.8)
Financing activities.... (18.1) 31.1 39.4 100.5 (24.6) (18.5) (13.5)
Ratio of earnings to fixed
charges................. 3.9x 5.2x 5.3x 6.4x 5.7x 6.4x 8.6x
</TABLE>
23
<PAGE> 24
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------- ----------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------ ------ ------ ------ ------ ------ ------
(UNAUDITED) (IN MILLIONS, EXCEPT OTHER DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Shipments
Tubing (tons in
thousands)............ 622.4 621.7 798.1 701.1 360.0 347.0 384.4
Wire (pounds in
millions)............. 64.3 52.3 70.3 73.5 70.1 65.1 62.6
Number of active
employees............... 2,577 2,521 2,545 2,455 1,300 1,332 1,306
BALANCE SHEET DATA (AT
PERIOD END):
Cash, cash equivalents and
marketable securities... $ 8.0 $ 2.3 $ 12.8 $ 7.1 $ 0.8 $ 4.2 $ 5.6
Working capital........... 110.2 106.8 117.2 119.2 63.2 60.8 20.2
Property, plant and
equipment............... 295.8 258.4 282.3 228.6 134.7 137.7 125.8
Total assets.............. 539.4 504.8 531.1 472.2 265.1 257.3 249.5
Total debt................ 154.2 136.6 163.7 164.6 60.4 70.9 75.7
Total postemployment
health care and other
insurance benefit
liabilities............. 40.9 41.7 39.9 41.7 32.0 30.9 31.2
Total pension benefit
liabilities............. (8.2) 1.9 (3.5) 6.0 13.5 16.4 14.5
Shareholders' equity...... 213.2 188.9 199.4 135.9 91.1 82.2 71.4
</TABLE>
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<PAGE> 25
THE EXCHANGE OFFER
The LTV Corporation and the subsidiary guarantors have agreed, pursuant to
a registration rights agreement dated November 2, 1999 with the placement agents
of the old notes
(1) to file a registration statement not later than 60 days after the
date of issuance of the old notes with respect to an offer to exchange the
old notes for a new issue of notes, with terms substantially the same as of
the old notes but registered under the Securities Act,
(2) to cause the registration statement to be declared effective by
the SEC not later than 150 days after the date of issuance of the old notes
and
(3) use our best efforts to consummate the exchange offer and issue
the new notes within 60 business days after the registration statement is
declared effective.
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of old notes in any jurisdiction in which the exchange
offer or acceptance of the exchange offer would violate the securities or blue
sky laws of that jurisdiction.
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
This prospectus and the accompanying letter of transmittal contain the
terms and conditions of the exchange offer. Upon the terms and subject to the
conditions included in this prospectus and in the accompanying letter of
transmittal, which together are the exchange offer, we will accept for exchange
old notes which are properly tendered on or prior to the expiration date, unless
you have previously withdrawn them.
- For each $1,000 principal amount of old notes surrendered to us in the
exchange offer, we will give you $1,000 principal amount of new notes.
- We will keep the exchange offer open for not less than 30 days, or longer
if required by applicable law, after the date that we first mail notice
of the exchange offer to the holders of the old notes. We are sending
this prospectus, together with the letter of transmittal, on or about the
date of this prospectus to all of the registered holders of old notes at
their addresses listed in the trustee's security register with respect to
old notes.
- The exchange offer expires at 5:00 p.m., New York City time, on May 2,
2000; provided, however, that we, in our sole discretion, may extend the
period of time for which the exchange offer is open. The term "EXPIRATION
DATE" means May 2, 2000 or, if extended by us, the latest time and date
to which the exchange offer is extended.
- As of the date of this prospectus, $275,000,000 in aggregate principal
amount of the old notes were outstanding. The exchange offer is not
conditioned upon any minimum principal amount of old notes being
tendered.
- Our obligation to accept old notes for exchange in the exchange offer is
subject to the conditions that we describe in the section called
"Conditions to the Exchange Offer" below.
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<PAGE> 26
- We expressly reserve the right, at any time, to extend the period of time
during which the exchange offer is open, which will delay acceptance of
any old notes, by giving oral or written notice of an extension to the
exchange agent and notice of that extension to the holders as described
below. During any extension, all old notes previously tendered will
remain subject to the exchange offer unless withdrawal rights are
exercised. Any old notes not accepted for exchange for any reason will be
returned without expense to the tendering holder as promptly as
practicable after the expiration or termination of the exchange offer.
- We expressly reserve the right to amend or terminate the exchange offer,
and not to accept for exchange any old notes that we have not yet
accepted for exchange, if any of the conditions of the exchange offer
specified below under "Conditions to the Exchange Offer" are not
satisfied.
- We will give oral or written notice of any extension, amendment,
termination or non-acceptance described above to holders of the old notes
as promptly as practicable. If we extend the expiration date, we will
give notice by means of a press release or other public announcement no
later than 9:00 a.m., New York City time, on the business day after the
previously scheduled expiration date. Without limiting the manner in
which we may choose to make any public announcement and subject to
applicable law, we will have no obligation to publish, advertise or
otherwise communicate any public announcement other than by issuing a
release to the Dow Jones News Service.
- Holders of old notes do not have any appraisal or dissenters' rights in
connection with the exchange offer.
- Old notes which are not tendered for exchange or are tendered but not
accepted in connection with the exchange offer will remain outstanding
and be entitled to the benefits of the indenture, but will not be
entitled to any further registration rights under the registration rights
agreement.
- We intend to conduct the exchange offer in accordance with the applicable
requirements of the Exchange Act and the rules and regulations of the SEC
under the Exchange Act.
PROCEDURES FOR TENDERING OLD NOTES
WHAT TO SUBMIT AND HOW
When you tender to us old notes as set forth below, our acceptance of the
old notes will constitute a binding agreement between you and us upon the terms
and subject to the conditions in this prospectus and in the accompanying letter
of transmittal. If you, as the registered holder of an old note, wish to tender
your old notes for exchange in the exchange offer, you must transmit a properly
completed and duly executed letter of transmittal, including all other documents
required by the letter of transmittal, to U.S. Bank Trust National Association
at the address set forth below under "Exchange Agent" on or prior to the
expiration date.
In addition,
(1) certificates for old notes must be received by the exchange agent
along with the letter of transmittal, or
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(2) a timely confirmation of a book-entry transfer of old notes, if
this procedure is available, into the exchange agent's account at DTC using
the procedure for book-entry transfer described below, must be received by
the exchange agent prior to the expiration date or
(3) you must comply with the guaranteed delivery procedures described
below.
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND NOTICES OF
GUARANTEED DELIVERY IS AT YOUR ELECTION AND RISK. IF DELIVERY IS BY MAIL, WE
RECOMMEND THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED,
BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO LTV.
HOW TO SIGN YOUR LETTER OF TRANSMITTAL AND OTHER DOCUMENTS
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the old notes being surrendered for
exchange are tendered
(1) by a registered holder of the old notes who has not completed the
box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal or
(2) for the account of an eligible institution.
If signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, the guarantees must be by any of the
following eligible institutions:
- a firm which is a member of a registered national securities exchange or
a member of the National Association of Securities Dealers, Inc. or
- a commercial bank or trust company having an office or correspondent in
the United States.
If the letter of transmittal is signed by a person or persons other than
the registered holder or holders of old notes, the old notes must be endorsed or
accompanied by appropriate powers of attorney, in either case signed exactly as
the name or names of the registered holder or holders that appear on the old
notes and with the signature guaranteed.
If the letter of transmittal or any old notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers or corporations or others acting in a fiduciary or representative
capacity, the person should so indicate when signing and, unless waived by LTV,
proper evidence satisfactory to LTV of its authority to so act must be
submitted.
By executing, or otherwise becoming bound by a letter of transmittal, each
holder of the old notes, other than particular specified holders, will represent
that:
- it is not our affiliate;
- any new notes to be received by it were acquired in the ordinary course
of business; and
- it has no arrangement with any person to participate in the distribution,
within the meaning of the Securities Act, of the new notes.
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If the tendering holder is a broker-dealer that will receive new notes for
its own account in exchange for old notes that were acquired as a result of
market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
those new notes. See "-- Resale of the New Notes."
IMPORTANT RULES CONCERNING THE EXCHANGE OFFER
You should note that:
- All questions as to the validity, form, eligibility, time of receipt and
acceptance of old notes tendered for exchange will be determined by LTV
in its sole discretion, which determination shall be final and binding.
- We reserve the absolute right to reject any and all tenders of any
particular old notes not properly tendered or to not accept any
particular old notes which acceptance might, in our judgment or the
judgment of our counsel, be unlawful.
- We also reserve the absolute right to waive any defects or irregularities
or conditions of the exchange offer as to any particular old notes either
before or after the expiration date, including the right to waive the
ineligibility of any holder who seeks to tender old notes in the exchange
offer. Unless we agree to waive any defect or irregularity in connection
with the tender of old notes for exchange, you must cure any defect or
irregularity within any reasonable period of time as we shall determine.
- Our interpretation of the terms and conditions of the exchange offer as
to any particular old notes either before or after the expiration date
shall be final and binding on all parties.
- Neither LTV, the exchange agent nor any other person shall be under any
duty to give notification of any defect or irregularity with respect to
any tender of old notes for exchange, nor shall any of them incur any
liability for failure to give any notification.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Once all of the conditions to the exchange offer are satisfied or waived,
we will accept, promptly after the expiration date, all old notes properly
tendered and will issue the new notes promptly after acceptance of the old
notes. See "Conditions to the Exchange Offer" below. For purposes of the
exchange offer, our giving of oral or written notice of our acceptance to the
exchange agent will be considered our acceptance of the exchange offer.
In all cases, we will issue new notes in exchange for old notes that are
accepted for exchange only after timely receipt by the exchange agent of:
- certificates for old notes, or
- a timely book-entry confirmation of transfer of old notes into the
exchange agent's account at DTC using the book-entry transfer procedures
described below, and
- a properly completed and duly executed letter of transmittal and all
other required documents.
If we do not accept any tendered old notes for any reason included in the
terms and conditions of the exchange offer or if you submit certificates
representing old notes in a greater principal amount than you wish to exchange,
we will return any unaccepted or non-
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exchanged old notes without expense to the tendering holder or, in the case of
old notes tendered by book-entry transfer into the exchange agent's account at
DTC using the book-entry transfer procedures described below, non-exchanged old
notes will be credited to an account maintained with DTC as promptly as
practicable after the expiration or termination of the exchange offer.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the old notes at DTC for purposes of the exchange offer promptly after the
date of this prospectus. Any financial institution that is a participant in
DTC's systems may make book-entry delivery of old notes by causing DTC to
transfer old notes into the exchange agent's account in accordance with DTC's
Automated Tender Offer Program procedures for transfer. However, the exchange
for the old notes so tendered will only be made after timely confirmation of
book-entry transfer of old notes into the exchange agent's account, and timely
receipt by the exchange agent of an agent's message, transmitted by DTC and
received by the exchange agent and forming a part of a book-entry confirmation.
The agent's message must state that DTC has received an express acknowledgment
from the participant tendering old notes that are the subject of that book-entry
confirmation that the participant has received and agrees to be bound by the
terms of the letter of transmittal, and that we may enforce the agreement
against that participant.
Although delivery of old notes may be effected through book-entry transfer
into the exchange agent's account at DTC, the letter of transmittal, or a
facsimile copy, properly completed and duly executed, with any required
signature guarantees, must in any case be delivered to and received by the
exchange agent at its address listed under "-- Exchange Agent" on or prior to
the expiration date, or the guaranteed delivery procedure set forth below must
be complied with.
If your old notes are held through DTC, you must complete a form called
"instructions to registered holder and/or book-entry participant," which will
instruct the DTC participant through whom you hold your notes of your intention
to tender your old notes or not tender your old notes. Please note that delivery
of documents to DTC in accordance with its procedures does not constitute
delivery to the exchange agent and we will not be able to accept your tender of
notes until the exchange agent receives a letter of transmittal and a book-entry
confirmation from DTC with respect to your notes. A copy of that form is
available from the exchange agent.
GUARANTEED DELIVERY PROCEDURES
If you are a registered holder of old notes and you want to tender your old
notes but your old notes are not immediately available, or time will not permit
your old notes to reach the exchange agent before the expiration date, or the
procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected if
(1) the tender is made through an eligible institution,
(2) prior to the expiration date, the exchange agent receives, by
telegram, telex, facsimile transmission, mail or hand delivery, from that
eligible institution a properly
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completed and duly executed letter of transmittal, or a facsimile copy, and
notice of guaranteed delivery, substantially in the form provided by us,
stating:
- the name and address of the holder of old notes
- the amount of old notes tendered
- the tender is being made by delivering that notice and guaranteeing
that within five New York Stock Exchange trading days after the date
of execution of the notice of guaranteed delivery, the certificates
of all physically tendered old notes, in proper form for transfer,
or a book-entry confirmation, as the case may be, and any other
documents required by the letter of transmittal will be deposited by
that eligible institution with the exchange agent, and
(3) the certificates for all physically tendered old notes, in proper
form for transfer, or a book-entry confirmation, as the case may be, are
received by the exchange agent within five New York Stock Exchange trading
days after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
You can withdraw your tender of old notes at any time on or prior to the
expiration date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the exchange agent by telegram, telex, facsimile, mail or hand
delivery at the address listed below under "Exchange Agent." Any notice of
withdrawal must specify:
- the name of the person having tendered the old notes to be withdrawn
- the old notes to be withdrawn
- the principal amount of the old notes to be withdrawn
- if certificates for old notes have been delivered to the exchange agent,
the name in which the old notes are registered, if different from that of
the withdrawing holder
- if certificates for old notes have been delivered or otherwise identified
to the exchange agent, then, prior to the release of those certificates,
you must also submit the serial numbers of the particular certificates to
be withdrawn and a signed notice of withdrawal with signatures guaranteed
by an eligible institution unless you are an eligible institution
- if old notes have been tendered using the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name
and number of the account at DTC to be credited with the withdrawn old
notes and otherwise comply with the procedures of that facility.
Please note that all questions as to the validity, form, eligibility and
time of receipt of notices of withdrawal will be determined by us, and our
determination shall be final and binding on all parties. Any old notes so
withdrawn will be considered not to have been validly tendered for exchange for
purposes of the exchange offer.
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If you have properly withdrawn old notes and wish to re-tender them, you
may do so by following one of the procedures described under "Procedures for
Tendering Old Notes" above at any time on or prior to the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the exchange offer, we will not be
required to accept for exchange, or to issue new notes in exchange for, any old
notes and may terminate or amend the exchange offer, if at any time before the
acceptance of old notes for exchange or the exchange of the new notes for old
notes, that acceptance or issuance would violate applicable law or any
interpretation of the staff of the SEC.
That condition is for our sole benefit and may be asserted by us regardless
of the circumstances giving rise to that condition. Our failure at any time to
exercise the foregoing rights shall not be considered a waiver by us of that
right. Our rights described in the prior paragraph are ongoing rights which we
may assert at any time and from time to time.
In addition, we will not accept for exchange any old notes tendered, and no
new notes will be issued in exchange for any old notes, if at that time any stop
order shall be threatened or in effect with respect to the exchange offer to
which this prospectus relates or the qualification of the indenture under the
Trust Indenture Act.
EXCHANGE AGENT
U.S. Bank Trust National Association has been appointed as the exchange
agent for the exchange offer. All executed letters of transmittal should be
directed to the exchange agent at one of the addresses set forth below.
Questions and requests for assistance, requests for additional copies of this
prospectus or of the letter of transmittal and requests for notices of
guaranteed delivery should be directed to the exchange agent, addressed as
follows:
Deliver To:
U.S. Bank Trust National Association
180 East 5th Avenue, Suite 200
St. Paul, Minnesota 55101
Attention: Specialized Finance Department
Facsimile Transmissions:
(651) 244-1537
To Confirm by Telephone or for Information:
(800) 934-6802
DELIVERY TO AN ADDRESS OTHER THAN AS LISTED ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS LISTED ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The principal solicitation is being made by mail; however, additional
solicitation may be made by telegraph, telephone or in person by our officers,
regular employees and affiliates. We will not pay any additional compensation to
any of our officers and employees who engage in soliciting tenders. We will not
make any payment to brokers, dealers, or others soliciting acceptances of the
exchange offer. However, we will pay the exchange agent
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reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection with the exchange offer.
The estimated cash expenses to be incurred in connection with the exchange
offer, including legal, accounting, SEC filing, printing and exchange agent
expenses, will be paid by us and are estimated in the aggregate to be $215,000.
TRANSFER TAXES
Holders who tender their old notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
us to register new notes in the name of, or request that old notes not tendered
or not accepted in the exchange offer be returned to, a person other than the
registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
RESALE OF THE NEW NOTES
Under existing interpretations of the staff of the SEC contained in several
no-action letters to third parties, the new notes would in general be freely
transferable after the exchange offer without further registration under the
Securities Act. The relevant no-action letters include the Exxon Capital
Holdings Corporation letter, which was made available by the SEC on May 13,
1988, and the Morgan Stanley & Co. Incorporated letter, made available on June
5, 1991.
However, any purchaser of old notes who is an "affiliate" of LTV or who
intends to participate in the exchange offer for the purpose of distributing the
new notes
(1) will not be able to rely on the interpretation of the staff of the
SEC,
(2) will not be able to tender its old notes in the exchange offer and
(3) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or transfer
of the notes unless that sale or transfer is made using an exemption from
those requirements.
By executing, or otherwise becoming bound by, the Letter of Transmittal
each holder of the old notes will represent that:
(1) it is not our "affiliate";
(2) any new notes to be received by it were acquired in the ordinary
course of its business; and
(3) it has no arrangement with any person to participate in the
"distribution," within the meaning of the Securities Act, of the new notes.
In addition, in connection with any resales of new notes, any broker-dealer
participating in the exchange offer who acquired notes for its own account as a
result of market-making or other trading activities must deliver a prospectus
meeting the requirements of the Securities Act. The SEC has taken the position
in the Shearman & Sterling no-action letter, which it made available on July 2,
1993, that participating broker-dealers may fulfill their prospectus delivery
requirements with respect to the new notes, other than a resale of an unsold
allotment from the original sale of the old notes, with the prospectus contained
in the exchange offer registration statement. Under the registration rights
agreement, we are required
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to allow participating broker-dealers and other persons, if any, subject to
similar prospectus delivery requirements to use this prospectus as it may be
amended or supplemented from time to time, in connection with the resale of new
notes.
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DESCRIPTION OF NOTES
The LTV Corporation issued the old notes and will issue the new notes under
an Indenture dated as of November 5, 1999, among itself, the Subsidiary
Guarantors and U.S. Bank Trust National Association, as trustee. We have filed a
copy of the Indenture as an exhibit to the registration statement of which this
prospectus forms a part. The following description is a summary of the material
terms of the Indenture. The summary of the Indenture is not complete and is
subject, and qualified in its entirety by reference, to the Trust Indenture Act
of 1939 and to all the provisions of the notes and the Indenture. In this
description, the words "LTV" and "we" refer only to The LTV Corporation and not
to any of its subsidiaries. You can find the definitions of particular terms
used in this description under the subheading "Certain Definitions" below.
We can issue an unlimited amount of additional notes at later dates under
the same Indenture. We can issue additional notes as part of the same series or
as an additional series and any additional notes that we issue in the future
will be substantially identical in all respects to the notes, except that
additional notes issued in the future will have different issuance prices and
issuance dates. Additional notes that are issued as part of the same series as
the notes will vote together with the notes as one class on matters under the
Indenture. LTV will issue notes only in fully registered form without coupons,
in denominations of $1,000 and integral multiples of $1,000.
GENERAL
The notes will mature on November 15, 2009. The notes are initially limited
in aggregate principal amount to $275 million. The notes will bear interest at
the rate set forth on the cover page of this prospectus from November 5, 1999,
or from the most recent interest payment date to which interest has been paid,
payable semiannually on May 15 and November 15 of each year, beginning on May
15, 2000, to the Persons who are registered holders of the notes at the close of
business on the preceding May 1 or November 1, as the case may be. Interest will
be computed on the basis of a 360-day year comprised of twelve 30-day months.
Payments in respect of the notes represented by a global security,
including principal, premium and interest, will be made by wire transfer of
immediately available funds to the accounts specified by the DTC. Unless other
arrangements are made by particular holders of notes, LTV will make all payments
in respect of a certificated note (including principal, premium and interest),
by mailing a check to the registered address of each holder of the certificated
note.
The terms of the new notes are identical in all material respects to the
terms of the old notes, except for some transfer restrictions and registration
rights relating to the old notes and except that, if:
(a) on or prior to the 60th day following the date of original
issuance of the old notes, neither the registration statement nor a shelf
registration statement for the new notes has been filed with the SEC;
(b) on or prior to the 150th day following the date of original
issuance of the old notes, neither the registration statement nor a shelf
registration statement has not been declared effective;
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(c) on or prior to the 180th day following the date of original
issuance of the old notes, neither the exchange offer has been consummated
nor a shelf registration statement has been declared effective or
(d) after either the registration statement or the shelf registration
statement has been declared effective, the registration statement
afterwards ceases to be effective or usable (subject to some exceptions) in
connection with resales of old notes or new notes in accordance with and
during the periods specified in the registration rights agreement,
special interest will accrue on the principal amount of the old notes and the
new notes, in addition to the stated interest on the old notes and the new
notes. This special interest will accrue from and including the date on which
any such registration default shall occur to but excluding the date on which all
registration defaults have been cured. Special interest will accrue at a rate of
0.25% per annum during the 90-day period immediately following the occurrence of
any registration default and shall increase to 0.50% per annum at the end of the
90-day period.
RANKING
The notes will be:
- senior obligations of LTV;
- equal in right of payment with all existing and future unsecured senior
debt of LTV;
- senior in right of payment to all future subordinated debt of LTV; and
- guaranteed on a senior basis by each Subsidiary Guarantor other than
Acquired Subsidiary Guarantors, and guaranteed on a senior subordinated
basis by each Acquired Subsidiary Guarantor.
As of December 31, 1999, the total outstanding senior debt of LTV and the
Subsidiary Guarantors, excluding unused commitments made by lenders, would have
been as follows:
$572 million -- approximate total outstanding senior debt of LTV and the
Subsidiary Guarantors, combined
The notes are unsecured obligations of LTV and the Subsidiary Guarantors.
Secured debt and other secured obligations of LTV and the Subsidiary Guarantors,
including the New Bank Financing, will be effectively senior to the notes to the
extent of the value of the assets securing the debt or other obligations. As of
December 31, 1999, the total outstanding secured debt and other secured
obligations of LTV and the Subsidiary Guarantors, excluding unused commitments
made by lenders and the contingent obligations under the $250 million USWA lien
would have been as follows:
$552 million -- approximate total outstanding secured debt and other
secured obligations of LTV and the Subsidiary Guarantors,
combined
In general, LTV's only claim in any of the assets of its subsidiaries is
that of a common stockholder, which claim is junior to claims that creditors,
including the Pension Benefit Guaranty Corporation, trade creditors and secured
creditors, and preferred stockholders, if any, have against those subsidiaries.
Because holders of the notes will be creditors only of LTV and of those
subsidiaries that are Subsidiary Guarantors, all the existing and future
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liabilities of subsidiaries that are not Subsidiary Guarantors, including any
claims of their trade creditors and preferred stockholders, if any, will be
effectively senior to the notes.
All the operations of LTV are conducted through its subsidiaries.
Therefore, LTV's ability to service its debt, including the notes, is dependent
upon the earnings of its subsidiaries, and their ability to distribute those
earnings as dividends, loans or other payments to LTV. Certain laws and
covenants in LTV's and its subsidiaries' other debt agreements restrict the
ability of LTV's subsidiaries to pay it dividends or make loans and advances to
it. If these restrictions are applied to subsidiaries that are not Subsidiary
Guarantors, then LTV would not be able to use the earnings of those subsidiaries
to make payments on the notes. Furthermore, under some circumstances, bankruptcy
"fraudulent conveyance" laws or other similar laws could invalidate the
Subsidiary Guaranties. If this were to occur, LTV would also be unable to use
the earnings of these Subsidiary Guarantors to the extent they face restrictions
on distributing funds to LTV. Any of the situations described above could make
it more difficult for LTV to service its debt.
The total balance sheet liabilities of the Subsidiary Guarantors and LTV's
other subsidiaries as of December 31, 1999, excluding unused commitments made by
lenders, outstanding pension liabilities of approximately $575 million and
outstanding postemployment healthcare and other insurance benefits of
approximately $1.6 billion, would have been as follows:
$4.2 billion -- approximate total balance sheet liabilities of the
Subsidiary Guarantors, including the guarantees those
Subsidiaries will Incur with respect to LTV's 8.20% Senior
Notes due 2007 as described below
$154 million -- approximate total balance sheet liabilities of all other
subsidiaries
The Subsidiary Guarantors and LTV's other subsidiaries have other
liabilities, including contingent liabilities, that may be significant. The
Indenture contains limitations on the amount of additional Debt that LTV and the
Restricted Subsidiaries may Incur. However, the amounts of the Debt could
nevertheless be substantial and may be Incurred either by Subsidiary Guarantors
or by LTV's other subsidiaries.
SUBSIDIARY GUARANTIES
Except as described below under "Subordination of Acquired Subsidiary
Guaranties", the obligations of LTV under the Indenture, including the
repurchase obligation resulting from a Change of Control, will be fully and
unconditionally guaranteed, jointly and severally, on a senior unsecured basis,
by all the existing and any future Domestic Wholly Owned Subsidiaries of LTV,
other than any Securitization Subsidiary or any Inactive Subsidiary.
If LTV sells or otherwise disposes of either:
(1) its ownership interest in a Subsidiary Guarantor, or
(2) all or substantially all the assets of a Subsidiary Guarantor,
that Subsidiary Guarantor will be released from all its obligations under its
Subsidiary Guaranty. In addition, if LTV redesignates a Subsidiary Guarantor as
an Unrestricted Subsidiary, which LTV can do under some circumstances, the
redesignated Subsidiary Guarantor will be released from all its obligations
under its Subsidiary Guaranty. See "Certain Covenants -- Designation of
Restricted and Unrestricted Subsidiaries",
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"-- Limitation on Issuance or Sale of Capital Stock of Restricted Subsidiaries"
and "Merger, Consolidation and Sale of Property".
If any Subsidiary Guarantor makes payments under its Subsidiary Guaranty,
each of LTV and the other Subsidiary Guarantors must contribute their share of
the payments, subject, in the case of each Acquired Subsidiary Guarantor, to the
subordination provisions described below under "Subordination of Acquired
Subsidiary Guaranties". LTV's and the other Subsidiary Guarantors' shares of the
payment will be computed based on the proportion that the net worth of LTV or
the relevant Subsidiary Guarantor represents relative to the aggregate net worth
of LTV and all the Subsidiary Guarantors combined.
In connection with the offering of the old notes, LTV amended its 8.20%
Senior Notes due 2007 to grant, in the case of each Subsidiary Guarantor that is
not an Acquired Subsidiary Guarantor, a senior unsecured guarantee of the 8.20%
Senior Notes due 2007 and, in the case of each Acquired Subsidiary Guarantor, a
senior subordinated guarantee of the 8.20% Senior Notes due 2007.
FUTURE SUBSIDIARY GUARANTORS
LTV will be required to cause each Person that becomes a Domestic Wholly
Owned Subsidiary following the Issue Date, other than a Securitization
Subsidiary or an Inactive Subsidiary, or any Person that ceases to be an
Inactive Subsidiary to execute and deliver a Subsidiary Guaranty as required
under "Certain Covenants -- Future Subsidiary Guarantors".
SUBORDINATION OF ACQUIRED SUBSIDIARY GUARANTIES
The obligations of Copperweld Corporation, Welded Tube Corporation of
America and each of their respective Domestic Wholly Owned Subsidiaries
(collectively, the "Acquired Subsidiary Guarantors") under their respective
Subsidiary Guaranties (the "Acquired Subsidiary Guaranties") will be
subordinated to their obligations under the New Bank Financing and Permitted
Refinancing Debt in respect thereof (collectively, "Designated Senior Debt") as
described below. As a result of this subordination, holders of Designated Senior
Debt will be entitled to receive full payment in cash on all obligations owed to
them before any Acquired Subsidiary Guarantor can make any payment to holders of
the notes in any of the following situations or proceedings relating to the
Subsidiary Guarantor:
- liquidation, dissolution or winding up;
- bankruptcy, reorganization, insolvency, receivership or similar
proceedings;
- an assignment for the benefit of its creditors; or
- any marshaling of its assets and liabilities.
As a result of the subordination referred to above, no Acquired Subsidiary
Guarantor may make any payment pursuant to its Obligations or repurchase, redeem
or otherwise retire or defease any notes (collectively, "make an Acquired
Subsidiary Guarantor payment"), if:
(a) any principal, premium or interest in respect of any Designated
Senior Debt is not paid when due, including at maturity, or
(b) any other default on Designated Senior Debt occurs and the
maturity of the Debt is accelerated in accordance with its terms, unless,
in either case,
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(1) the default has been cured or waived and any such acceleration
has been rescinded, or
(2) the Designated Senior Debt has been paid in full in cash;
provided, however, that an Acquired Subsidiary Guarantor may make an Acquired
Subsidiary Guarantor payment without regard to the foregoing if that Acquired
Subsidiary Guarantor and the Trustee receive written notice approving the
payment from the Representative under the Designated Senior Debt.
During the continuance of any default, other than a default described in
clause (a) or (b) above, under the Designated Senior Debt pursuant to which the
maturity of the Designated Senior Debt may be accelerated immediately without
further notice (except any notice required to effect the acceleration), or the
expiration of any applicable grace period, no Acquired Subsidiary Guarantor may
make an Acquired Subsidiary Guarantor payment for a period (a "Payment Blockage
Period") beginning with the receipt by the Acquired Subsidiary Guarantor and the
Trustee of written notice of the default from the Representative under the
Designated Senior Debt specifying an election to effect a Payment Blockage
Period (a "Payment Blockage Notice"). The Payment Blockage Period will end 179
days afterwards, unless it is terminated earlier:
(a) by written notice to the Trustee and the Acquired Subsidiary
Guarantor from the Representative under the Designated Senior Debt,
(b) because the default is no longer continuing, or
(c) because all the Designated Senior Debt has been repaid in full in
cash.
Unless the holders of Designated Senior Debt or the Representative under
the Designated Senior Debt have accelerated the maturity of the Designated
Senior Debt and not rescinded the acceleration, an Acquired Subsidiary Guarantor
may, unless otherwise prohibited as described in the first paragraph of this
section, resume making Acquired Subsidiary Guarantor payments after the end of
the Payment Blockage Period.
Not more than one Payment Blockage Notice may be given in any consecutive
360-day period, irrespective of the number of defaults during this period.
Upon any payment or distribution of the assets of an Acquired Subsidiary
Guarantor (1) upon a total or partial liquidation, dissolution or winding up of
that Acquired Subsidiary Guarantor, (2) in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to that Acquired
Subsidiary Guarantor, (3) upon an assignment for the benefit of creditors of
that Acquired Subsidiary Guarantor or (4) upon any marshalling of the assets and
liabilities of that Acquired Subsidiary Guarantor:
(a) the holders of Designated Senior Debt will be entitled to receive
payment in full in cash before the holders of the notes are entitled to
receive any payment pursuant to the Acquired Subsidiary Guaranty of that
Acquired Subsidiary Guarantor, except that holders of notes may receive and
retain shares of stock and any debt securities of that Acquired Subsidiary
Guarantor that are subordinated to the Designated Senior Debt to at least
the same extent as the Acquired Subsidiary Guaranty of that Acquired
Subsidiary Guarantor is subordinated to the Designated Senior Debt; and
(b) until the Designated Senior Debt is paid in full in cash, any
distribution to which holders of the notes would be entitled but for the
subordination provisions of the
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<PAGE> 39
Indenture with respect to the Acquired Subsidiary Guaranties will be made
to holders of the Designated Senior Debt. If a payment or distribution is
made to holders of notes that, due to the subordination provisions with
respect to the Acquired Subsidiary Guaranties, should not have been made to
them, those holders are required to hold it in trust for the holders of
Designated Senior Debt and pay it over to them as their interests may
appear.
If payment of the notes is accelerated when any Designated Senior Debt is
outstanding, no Acquired Subsidiary Guarantor may make an Acquired Subsidiary
Guarantor payment until five business days after the Representative of that
Designated Senior Debt receives notice of the acceleration and may subsequently
make an Acquired Subsidiary Guarantor payment only if the Indenture otherwise
permits payment at that time.
Because of the Indenture's subordination provisions with respect to the
Acquired Subsidiary Guaranties, holders of Designated Senior Debt may recover
disproportionately more than the holders of the notes recover in a bankruptcy or
similar proceeding relating to any Acquired Subsidiary Guarantor. In such a
case, there may be insufficient assets, or no assets, remaining to pay the
principal of or interest on the notes.
OPTIONAL REDEMPTION
Except as set forth in the following paragraph, the notes will not be
redeemable at the option of LTV prior to November 15, 2004. Afterwards, the
notes will be redeemable at the option of LTV, in whole or in part, on not less
than 30 nor more than 60 days' prior notice, at the following redemption prices
plus accrued and unpaid interest, if any, to the redemption date, subject to the
right of holders of record on the relevant record date to receive interest due
on the relevant interest payment date, if redeemed during the 12-month period
commencing on November 15 of the years set forth below. The redemption prices
below are expressed as percentages of principal amount:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2004........................................................ 105.875%
2005........................................................ 103.917
2006........................................................ 101.958
2007 and afterwards......................................... 100.000
</TABLE>
At any time and from time to time prior to November 15, 2002, LTV may
redeem up to a maximum of 35% of the original aggregate principal amount of the
notes with the proceeds of one or more Public Equity Offerings, at a redemption
price equal to 111.750% of the principal amount of the notes, plus accrued and
unpaid interest thereon, if any, to the redemption date (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date); provided, however, that after giving effect to
any such redemption, at least 65% of the original aggregate principal amount of
the notes remains outstanding. Any such redemption shall be made within 60 days
of the Public Equity Offering upon not less than 30 nor more than 60 days notice
mailed to each holder of notes being redeemed and otherwise in accordance with
the procedures set forth in the Indenture.
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SINKING FUND
There are no sinking fund payments for the notes.
REPURCHASE AT THE OPTION OF HOLDERS UPON A CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder of notes shall have
the right to require LTV to repurchase all or any part of the holder's notes
pursuant to the offer described below (the "Change of Control Offer") at a
purchase price (the "Change of Control Purchase Price") equal to 101% of the
principal amount of the holder's notes, plus accrued and unpaid interest
thereon, if any, to the purchase date, subject to the right of holders of record
on the relevant record date to receive interest due on the relevant interest
payment date.
Within 30 days following any Change of Control, LTV shall:
(a) cause a notice of the Change of Control Offer to be sent at least
once to the Dow Jones News Service or similar business news service in the
United States and
(b) send, by first-class mail, with a copy to the Trustee, to each
holder of notes, at the holder's address appearing in the Security
Register, a notice stating, among other things:
(1) that a Change of Control has occurred and a Change of Control
Offer is being made pursuant to the covenant entitled "Repurchase at the
Option of Holders Upon a Change of Control" and that all notes timely
tendered will be accepted for payment;
(2) the Change of Control Purchase Price and the purchase date,
which shall be, subject to any contrary requirements of applicable law,
a business day no earlier than 30 days nor later than 60 days from the
date the notice is mailed;
(3) the circumstances and relevant facts regarding the Change of
Control, including information with respect to pro forma historical
income, cash flow and capitalization after giving effect to the Change
of Control; and
(4) the procedures that holders of notes must follow in order to
tender their notes, or portions of their notes, for payment, and the
procedures that holders of notes must follow in order to withdraw an
election to tender notes, or portions of notes, for payment.
LTV will comply, to the extent applicable, with the requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations in
connection with the repurchase of notes pursuant to a Change of Control Offer.
To the extent that the provisions of any securities laws or regulations conflict
with the provisions of the covenant described hereunder, LTV will comply with
the applicable securities laws and regulations and will not be deemed to have
breached its obligations under the covenant described hereunder by virtue of the
compliance.
The Change of Control repurchase feature is a result of negotiations
between LTV and the Placement Agents. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that LTV would decide to do so in the future. Subject to particular covenants
described below, LTV could, in the future, enter into some transactions,
including acquisitions, refinancings or other recapitalization, that would
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<PAGE> 41
not constitute a Change of Control under the Indenture, but that could increase
the amount of debt outstanding at the time or otherwise affect LTV's capital
structure or credit ratings.
The definition of Change of Control includes a phrase relating to the sale,
assignment, lease, conveyance, disposition or transfer of "all or substantially
all" LTV's assets. Although there is a developing body of case law interpreting
the phrase "substantially all", there is no precise established definition of
the phrase under applicable law. Accordingly, the ability of a holder of notes
to require LTV to repurchase those notes as a result of a sale, assignment,
lease, conveyance, disposition or transfer of less than all the assets of LTV
may be uncertain. In such a case, holders of the notes may not be able to
resolve this uncertainty without resorting to legal action.
The occurrence of some of the events that constitute a Change of Control
under the Indenture would constitute a default under the New Bank Financing.
Other debt of LTV may contain prohibitions of some events which would constitute
a Change of Control or, as is the case with LTV's existing 8.20% Senior Notes
due 2007, require the debt to be repurchased upon a Change of Control. Moreover,
the exercise by holders of notes of their right to require LTV to repurchase
those notes could cause a default under existing or future debt of LTV, even if
the Change of Control itself does not, due to the financial effect of the
repurchase on LTV. Finally, LTV's ability to pay cash to holders of notes upon a
repurchase may be limited by LTV's then existing financial resources. There can
be no assurance that sufficient funds will be available when necessary to make
any required repurchases. LTV's failure to purchase the notes in connection with
a Change of Control would result in a default under the Indenture which would,
in turn, constitute a default under the existing or future debt of LTV. The
provisions under the Indenture relative to LTV's obligation to make an offer to
repurchase the notes as a result of a Change of Control may be waived or
modified at any time prior to the occurrence of the Change of Control with the
written consent of the holders of a majority in principal amount of the notes.
CERTAIN COVENANTS
COVENANT TERMINATION. The Indenture provides that the following restrictive
covenants will be applicable to LTV and the Restricted Subsidiaries unless LTV
reaches Investment Grade Status. After LTV has reached Investment Grade Status,
and notwithstanding that LTV may later cease to have an Investment Grade Rating
from either or both of the Rating Agencies, LTV and the Restricted Subsidiaries
will be released from their obligations to comply with the restrictive covenants
described herein, except for the covenants described under "Limitation on
Liens", "Limitation on Sale and Leaseback Transactions", "Designation of
Restricted and Unrestricted Subsidiaries" (other than clause (x) of the second
paragraph (and such clause (x) as referred to in the first paragraph)
thereunder) and "Future Subsidiary Guarantors". LTV and the Subsidiary
Guarantors will also, upon reaching Investment Grade Status, remain obligated to
comply with the provisions, other than clauses (e) and (f) of the first and
second paragraphs, described under "Merger, Consolidation and Sale of Property"
and with the provisions described under "Repurchase at the Option of Holders
Upon a Change of Control".
LIMITATION ON DEBT AND RESTRICTED SUBSIDIARY PREFERRED STOCK. LTV shall
not, and shall not permit any Restricted Subsidiary to, directly or indirectly,
Incur any Debt, which includes preferred stock, in the case of Restricted
Subsidiaries, unless, after giving pro forma effect to the application of the
proceeds thereof, no Default or Event of Default would occur as a consequence of
such Incurrence or be continuing following such Incurrence and either (a)
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<PAGE> 42
after giving pro forma effect to the Incurrence of such Debt and the application
of the proceeds thereof, the Consolidated Interest Coverage Ratio would be
greater than 2.00 to 1.00 or (b) such Debt is Permitted Debt.
The term "Permitted Debt" is defined to include the following:
(a) Debt of LTV evidenced by the notes and of the Subsidiary
Guarantors evidenced by the Subsidiary Guaranties relating to the notes;
(b) Debt under the Credit Facilities; provided that the aggregate
principal amount of all such Debt under the Credit Facilities, together
with all Permitted Refinancing Debt Incurred in respect of Debt previously
Incurred pursuant to this clause (b), at any one time outstanding shall not
exceed the greater of:
(1) $470 million less the sum of the aggregate amount of all
prepayments and required payments of principal applied to reduce the
aggregate amount available to be borrowed under the Credit Facilities or
such Permitted Refinancing Debt, including pursuant to the covenant
described below "-- Limitation on Asset Sales", and
(2) the sum of the amounts equal to (x) 60% of the book value of
the inventory of LTV and the Restricted Subsidiaries and (y) 85% of the
book value of the accounts receivable of LTV and the Restricted
Subsidiaries, in each case as of the most recently ended quarter of LTV
for which financial statements of LTV have been provided to the holders
of notes;
(c) Capital Expenditure Debt; provided that:
(1) the aggregate principal amount of such Debt does not exceed the
Fair Market Value (on the date of the Incurrence thereof) of the
Property acquired, constructed or leased and
(2) the aggregate principal amount of all Debt Incurred and then
outstanding pursuant to this clause (c), together with all Permitted
Refinancing Debt Incurred and then outstanding in respect of Debt
previously Incurred pursuant to this clause (c), does not exceed $300
million;
(d) Debt of LTV owing to and held by any Wholly Owned Subsidiary and
Debt of a Restricted Subsidiary owing to and held by LTV or any Wholly
Owned Subsidiary; provided, however, that any subsequent issue or transfer
of Capital Stock or other event that results in any such Wholly Owned
Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent
transfer of any such Debt, except to LTV or a Wholly Owned Subsidiary,
shall be deemed, in each case, to constitute the Incurrence of such Debt by
the issuer thereof;
(e) Debt of a Restricted Subsidiary Incurred and outstanding on or
prior to the date on which such Restricted Subsidiary was acquired by LTV
or otherwise became a Restricted Subsidiary, other than Debt Incurred as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of transactions
pursuant to which such Restricted Subsidiary became a Subsidiary of LTV or
was otherwise acquired by LTV, provided that at the time such Restricted
Subsidiary was acquired by LTV or otherwise became a Restricted Subsidiary
and after giving pro forma effect to the Incurrence of such Debt, LTV would
have been able to
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Incur $1.00 of additional Debt pursuant to clause (a) of the immediately
preceding paragraph;
(f) Debt under Interest Rate Agreements entered into by LTV or a
Restricted Subsidiary for the purpose of limiting interest rate risk in the
ordinary course of the financial management of LTV or such Restricted
Subsidiary and not for speculative purposes, provided that the obligations
under such agreements are directly related to payment obligations on Debt
otherwise permitted by the terms of this covenant;
(g) Debt under Commodity Price Protection Agreements entered into by
LTV or a Restricted Subsidiary in the ordinary course of the financial
management, including cost control, of LTV or such Restricted Subsidiary
and not for speculative purposes;
(h) Debt under Currency Exchange Protection Agreements entered into by
LTV or a Restricted Subsidiary for the purpose of limiting currency
exchange rate risks directly related to transactions entered into by LTV or
such Restricted Subsidiary in the ordinary course of business, which, for
purposes of this clause (h), shall include payment obligations on Debt
otherwise permitted by this covenant, and not for speculative purposes;
(i) Debt in connection with one or more standby letters of credit or
performance bonds issued by LTV or a Restricted Subsidiary in the ordinary
course of business or pursuant to self-insurance obligations and not in
connection with the borrowing of money or the obtaining of advances or
credit;
(j) Debt outstanding on the Issue Date not otherwise described in
clauses (a) through (I) above and any additional Debt Incurred after the
Issue Date representing interest paid in-kind on Debt outstanding pursuant
to this clause (j);
(k) Debt of LTV or any Restricted Subsidiary (other than Debt
permitted by the immediately preceding paragraph or the other clauses of
this paragraph) in an aggregate principal amount outstanding at any one
time not to exceed $100 million;
(l) Attributable Debt under any Sale and Leaseback Transaction with
respect to LTV's Portland tubing facility in an aggregate amount, together
with all Permitted Refinancing Debt Incurred and then outstanding in
respect of Debt previously Incurred pursuant to this clause (l), not to
exceed $60 million;
(m) Debt of LTV in the form of a Guaranty of the obligations of LTV's
Columbus Coating joint venture with respect to:
(1) a construction facility in an aggregate amount, together with
all Permitted Refinancing Debt Incurred and then outstanding in respect
of Debt previously Incurred pursuant to this clause (m), not to exceed
$145 million or
(2) following the completion of construction, Attributable Debt
under a Sale and Leaseback Transaction involving such joint venture in
an aggregate amount, together with all Permitted Refinancing Debt
Incurred and then outstanding in respect of Debt previously Incurred
pursuant to this clause (m) and all Debt of LTV remaining outstanding
pursuant to the preceding clause (1), not to exceed $250 million; and
(n) Permitted Refinancing Debt Incurred in respect of Debt Incurred
pursuant to clause (a) of the immediately preceding paragraph and clauses
(a), (b), (c), (e), (j),
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(l) and (m) above, subject, in the case of clauses (b), (c), (l) and (m)
above, to the limitations set forth in the respective provisos thereto.
LIMITATION ON RESTRICTED PAYMENTS. LTV shall not make, and shall not permit
any Restricted Subsidiary to make, directly or indirectly, any Restricted
Payment if at the time of, and after giving pro forma effect to, such proposed
Restricted Payment:
(a) a Default or Event of Default shall have occurred and be
continuing,
(b) LTV could not Incur at least $1.00 of additional Debt pursuant to
clause (a) of the first paragraph of the covenant described under
"Limitation on Debt and Restricted Subsidiary Preferred Stock" or
(c) the aggregate amount of such Restricted Payment and all other
Restricted Payments declared or made since the Issue Date of LTV's 8.20%
Senior Notes due 2007, the amount of any Restricted Payment, if made other
than in cash, to be based upon Fair Market Value, would exceed an amount
equal to the sum of:
(1) 50% of the aggregate amount of Consolidated Net Income accrued
during the period, which is treated as one accounting period, from and
after the first day of the fiscal quarter following the end of the most
recent fiscal quarter ended immediately prior to the Issue Date of LTV's
8.20% Senior Notes due 2007 to the end of the most recent fiscal quarter
ending at least 45 days prior to the date of such Restricted Payment (or
if the aggregate amount of Consolidated Net Income for such period shall
be a deficit, minus 100% of such deficit),
(2) Capital Stock Sale Proceeds, and
(3) the amount by which Debt (other than Subordinated Obligations
issued or sold prior to the Issue Date of LTV's 8.20% Senior Notes due
2007), of LTV or any Restricted Subsidiary is reduced on LTV's
consolidated balance sheet upon the conversion or exchange, other than
by a Subsidiary of LTV, subsequent to the Issue Date of any Debt of LTV
or any Restricted Subsidiary convertible or exchangeable for Capital
Stock (other than Disqualified Stock), of LTV or Debt issued or sold to
LTV or a Subsidiary of LTV or an employee stock ownership plan or trust
established by LTV or any of its Subsidiaries for the benefit of their
employees (less the amount of any cash or other Property distributed by
LTV or any Restricted Subsidiary upon such conversion or exchange).
Notwithstanding the foregoing limitation, LTV may:
(a) pay dividends on its Capital Stock within 60 days of the
declaration of the dividends if, on said declaration date, such dividends
could have been paid in compliance with the Indenture; provided, however,
that at the time of such payment of such dividend, no other Default or
Event of Default shall have occurred and be continuing, or would result
therefrom; provided further, however, that such dividend shall be included
in the calculation of the amount of Restricted Payments;
(b) purchase, repurchase, redeem, legally defease, acquire or retire
for value Capital Stock of LTV or Subordinated Obligations in exchange for,
or out of the proceeds of the substantially concurrent sale of, Capital
Stock of LTV, other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary of LTV or an employee stock ownership plan
or trust established by LTV or any of its Subsidiaries for the benefit of
their employees; provided, however, that (1) such purchase, repurchase,
redemption, legal
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defeasance, acquisition or retirement shall be excluded in the calculation
of the amount of Restricted Payments and (2) the Net Cash Proceeds from
such exchange or sale shall be excluded from the calculation of the amount
of Capital Stock Sale Proceeds;
(c) purchase, repurchase, redeem, legally defease, acquire or retire
for value any Subordinated Obligations in exchange for, or out of the
proceeds of the substantially concurrent sale of, Permitted Refinancing
Debt; provided, however, that such purchase, repurchase, redemption, legal
defeasance, acquisition or retirement shall be excluded in the calculation
of the amount of Restricted Payments;
(d) pay dividends on the new preferred stock in accordance with the
terms thereof as in effect on the Issue Date, without regard to any
amendment, waiver or other modification thereto; provided, however, that at
the time of such payment of such dividend, no Default or Event of Default
shall have occurred and be continuing, or would result therefrom; provided
further, however, that such dividends shall be included in the calculation
of the amount of Restricted Payments;
(e) expend up to $5 million in any fiscal year of LTV to repurchase
common stock of LTV
(1) to distribute to current or former employees, officers and
directors of LTV and its Subsidiaries,
(2) from such current or former employees, officers or directors or
(3) otherwise in order to distribute as employee compensation;
provided, however, that at the time of, and after giving pro forma effect
to, any such expenditure, no Default or Event of Default shall have
occurred and be continuing; provided further, however, that such repurchase
shall be excluded in the calculation of the amount of Restricted Payments;
and
(f) expend up to $40 million for Restricted Payments in addition to
amounts permitted pursuant to clauses (a) through (e) above; provided,
however,that at the time of, and after giving pro forma effect to, any such
expenditure, no Default or Event of Default shall have occurred and be
continuing; provided further, however, that such expenditures shall be
excluded in the calculation of the amount of Restricted Payments.
Payments made pursuant to, and, in the case of clause (b), Capital Stock
Sale Proceeds received from, transactions described in the foregoing clauses of
this paragraph from and after the Issue Date of LTV's 8.20% Senior Notes due
2007 and prior to the Issue Date shall be excluded in the calculation of the
amount of Restricted Payments and Capital Stock Sale Proceeds in the same manner
and to the same extent as such transactions would be from and after the Issue
Date. In addition, amounts expended pursuant to Section 4.06(b)(iv) of the 8.20%
Senior Notes due 2007 indenture shall be excluded in the calculation of the
amount of Restricted Payments.
LIMITATION ON LIENS. LTV shall not, and shall not permit any Subsidiary
Guarantor to, directly or indirectly, Incur or suffer to exist, any Lien, other
than Permitted Liens, upon any of its Property, including Capital Stock of a
Subsidiary Guarantor, whether owned at the Issue Date or acquired afterwards, or
any interest therein or any income or profits therefrom, unless it has made or
will make effective provision whereby the notes or the applicable Subsidiary
Guaranty will be secured by such Lien equally and ratably with, or prior to, all
other Debt of LTV or such Subsidiary Guarantor secured by such Lien, provided
that any
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Lien securing Subordinated Obligations must be subordinated and junior to the
Lien securing the notes or relevant Subsidiary Guaranty and have the same or
lesser relative priority as the Subordinated Obligations shall have with respect
to the notes or such Subsidiary Guaranty.
LIMITATION ON ISSUANCE OR SALE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES. LTV
SHALL NOT:
(a) sell, pledge, hypothecate or otherwise dispose of any shares of
Capital Stock of a Restricted Subsidiary or
(b) permit any Restricted Subsidiary to, directly or indirectly, issue
or sell or otherwise dispose of any shares of its Capital Stock other than:
(1) directors' qualifying shares,
(2) to LTV or a Wholly Owned Subsidiary or
(3) if, immediately after giving effect to such disposition, such
Restricted Subsidiary would no longer constitute a Restricted
Subsidiary; provided, however, that, in the case of this clause (3), (x)
such disposition is effected in compliance with the covenant described
under "Limitation on Asset Sales" and (y) upon consummation of such
disposition and execution and delivery of a supplemental Indenture in
form satisfactory to the Trustee, such Restricted Subsidiary shall be
released from any Subsidiary Guaranty previously made by such Restricted
Subsidiary.
LIMITATION ON ASSET SALES. LTV shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, consummate any Asset Sale
unless:
(a) LTV or such Restricted Subsidiary receives consideration at the
time of such Asset Sale (or, in the case of a lease that is an Asset Sale,
LTV or such Restricted Subsidiary is to receive over the term of such lease
consideration) at least equal to the Fair Market Value of the Property
subject to such Asset Sale;
(b) at least 75% of the consideration paid to LTV or such Restricted
Subsidiary in connection with such Asset Sale is in the form of cash, Cash
Equivalents, Additional Assets, Liquid Securities or the assumption by the
purchaser of liabilities of LTV or any Restricted Subsidiary, other than
liabilities that are by their terms subordinated to the notes or any
applicable Subsidiary Guaranty, as a result of which LTV and the Restricted
Subsidiaries are no longer obligated with respect to such liabilities; and
(c) LTV delivers an Officers' Certificate to the Trustee certifying
that such Asset Sale complies with the foregoing clauses (a) and (b).
The Net Available Cash, or any portion thereof, from Asset Sales may be
applied by LTV or a Restricted Subsidiary, to the extent LTV or such Restricted
Subsidiary elects, or is required by the terms of any Debt:
(1) to prepay, repay, legally defease or purchase Senior Debt of LTV
or any Subsidiary Guarantor or Debt of any other Restricted Subsidiary,
excluding, in any such case, Debt owed to LTV or an Affiliate of LTV; or
(2) to reinvest in Additional Assets, including by means of an
Investment in Additional Assets by a Restricted Subsidiary with Net
Available Cash received by LTV or another Restricted Subsidiary; provided,
however, that in connection with any
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prepayment, repayment, legal defeasance or purchase of Debt pursuant to
clause (1) above, LTV or such Subsidiary Guarantor or other Restricted
Subsidiary shall retire such Debt and shall cause the related loan
commitment, if any, to be permanently reduced by an amount equal to the
principal amount so prepaid, repaid, legally defeased or purchased.
Any Net Available Cash from an Asset Sale not applied in accordance with
the preceding paragraph within twelve months from the date of the receipt of
such Net Available Cash shall constitute "Excess Proceeds". When the aggregate
amount of Excess Proceeds exceeds $5 million, taking into account income earned
on such Excess Proceeds, if any, LTV will be required to make an offer to
purchase with such Excess Proceeds on a pro rata basis according to principal
amount
(x) the notes, which offer (the "Prepayment Offer") shall be at a purchase
price equal to 100% of the principal amount thereof plus accrued and
unpaid interest thereon, if any, to the purchase date, subject to the
right of holders of record on the relevant record date to receive
interest due on the relevant interest payment date, in accordance with
the procedures, including prorating in the event of oversubscription,
set forth in the Indenture and
(y) any other Debt of LTV or any Subsidiary Guarantor that is pari passu
with the notes at a purchase price no greater than 100% of the
principal amount thereof plus accrued and unpaid interest thereon, if
any, to the purchase date, to the extent, in the case of this clause
(y), required under the terms thereof, other than Debt owed to LTV or
any Affiliate of LTV. To the extent that any portion of the amount of
Net Available Cash remains after compliance with the preceding sentence
and provided that all holders of notes have been given the opportunity
to tender their notes for purchase as described in the following
paragraph, LTV or such Restricted Subsidiary may use such remaining
amount for any purpose permitted by the Indenture and the amount of
Excess Proceeds will be reset to zero.
Within five business days after LTV is obligated to make a Prepayment Offer
as described in the preceding paragraph, LTV will send a written notice, by
first-class mail, to the holders of notes, accompanied by such information
regarding LTV and its Subsidiaries as LTV in good faith believes will enable
such holders to make an informed decision with respect to such Prepayment Offer.
Such notice will state, among other things, the purchase price and the purchase
date, which shall be, subject to any contrary requirements of applicable law, a
business day no earlier than 30 days nor later than 60 days from the date such
notice is mailed.
LTV will comply, to the extent applicable, with the requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations in
connection with the repurchase of notes pursuant to the covenant described
hereunder. To the extent that the provisions of any securities laws or
regulations conflict with provisions of the covenant described hereunder, LTV
will comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under the covenant described hereunder
by virtue thereof.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES.
LTV shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, create or
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otherwise cause or suffer to exist any consensual restriction on the right of
any Restricted Subsidiary to:
(a) pay dividends, in cash or otherwise, or make any other
distributions on or in respect of its Capital Stock, or pay any Debt or
other obligation owed, to LTV or any other Restricted Subsidiary,
(b) make any loans or advances to LTV or any other Restricted
Subsidiary or
(c) except for restrictions described in clause (2) under the covenant
described under "Limitation on Issuance or Sale of Capital Stock of
Restricted Subsidiaries", transfer any of its Property to LTV or any other
Restricted Subsidiary. The foregoing limitations will not apply:
(1) with respect to clauses (a), (b) and (c), to restrictions (A)
in effect on the Issue Date, (B) relating to Debt of a Restricted
Subsidiary and existing at the time it became a Restricted Subsidiary if
such restriction was not created in connection with or in anticipation
of the transaction or series of transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or was acquired by
LTV, (C) which result from the Refinancing of Debt Incurred pursuant to
an agreement referred to in the immediately preceding clause (1)(A) or
(B) above or in clause (2)(A) or (B) below, provided that such
restriction is no less favorable to the holders of notes than those
under the agreement evidencing the Debt so Refinanced, or (D) on any
Securitization Subsidiary; and
(2) with respect to clause (c) only, to restrictions (A) relating
to Debt that is permitted to be Incurred and secured pursuant to the
covenants described under "Limitation on Debt and Restricted Subsidiary
Preferred Stock" and "Limitation on Liens" that limit the right of the
debtor to dispose of the Property securing such Debt, (B) encumbrances
on Property at the time such Property was acquired by LTV or any
Restricted Subsidiary, so long as such restriction relates solely to the
Property so acquired and was not created in connection with or in
anticipation of such acquisition, (C) resulting from customary
provisions restricting subletting or assignment of leases or customary
provisions in other agreements that restrict assignment of such
agreements or rights thereunder or (D) customary restrictions contained
in asset sale agreements limiting the transfer of such Property pending
the closing of such sale.
LIMITATION ON TRANSACTIONS WITH AFFILIATES. LTV shall not, and shall not
permit any Restricted Subsidiary to, directly or indirectly, conduct any
business or enter into or suffer to exist any transaction or series of
transactions, including the purchase, sale, transfer, assignment, lease,
conveyance or exchange of any Property or the rendering of any service, with, or
for the benefit of, any Affiliate of LTV (an "Affiliate Transaction"), unless:
(a) the terms of such Affiliate Transaction are:
(1) set forth in writing and
(2) no less favorable to LTV or such Restricted Subsidiary, as the
case may be, than those that could be obtained in a comparable
arm's-length transaction with a Person that is not an Affiliate of LTV;
(b) if such Affiliate Transaction involves aggregate payments or value
in excess of $10 million, the Board of Directors, including a majority of
the disinterested members
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of the Board of Directors, approves such Affiliate Transaction and, in its
good faith judgment, believes that such Affiliate Transaction complies with
clause (a) of this paragraph as evidenced by a Board Resolution promptly
delivered to the Trustee; and
(c) if such Affiliate Transaction involves aggregate payments or value
in excess of $25 million, LTV obtains a written opinion from an Independent
Appraiser to the effect that the consideration to be paid or received in
connection with such Affiliate Transaction is fair, from a financial point
of view, to LTV or such Restricted Subsidiary, as the case may be.
Notwithstanding the foregoing limitation, LTV or any Restricted Subsidiary
may enter into or suffer to exist the following:
(1) any transaction or series of transactions between LTV and one or
more Restricted Subsidiaries or between two or more Restricted
Subsidiaries; provided that no more than 5% of the total voting power of
the Voting Stock, on a fully diluted basis, of any such Restricted
Subsidiary is owned by an Affiliate of LTV, other than a Restricted
Subsidiary;
(2) any Restricted Payment permitted to be made pursuant to the
covenant described under "Limitation on Restricted Payment";
(3) any issuance of securities, or other payments, awards or grants in
securities or otherwise pursuant to, or the funding of, employment
arrangements, pension plans, stock options and stock ownership plans
approved by the Board of Directors;
(4) the payment of reasonable fees to directors of LTV or such
Restricted Subsidiary who are not employees of LTV or any Restricted
Subsidiary;
(5) loans and advances to employees made in the ordinary course of
business and consistent with the past practices of LTV or such Restricted
Subsidiary, as the case may be, provided that such loans and advances do
not exceed $5 million in the aggregate at any one time outstanding;
(6) any transaction or series of transactions between LTV or any
Restricted Subsidiary and any of their joint ventures, provided that (x)
such transaction or series of transactions is in the ordinary course of
business between LTV or such Restricted Subsidiary and such joint venture
and is consistent with the past practices of LTV and the Restricted
Subsidiaries with respect to their joint ventures and (y) if such
transaction or series of transactions constitutes an Investment by LTV,
such Restricted Subsidiary or such joint venture, the other equity
investors in such joint venture (A) participate in such Investment on the
same basis as LTV or such Restricted Subsidiary, (B) have their interests
in such joint venture diluted to the extent such investors elect not to so
participate in such Investment or (C) individually beneficially own 10% or
less of the equity interests in such joint venture; and
(7) any transaction or series of transactions between LTV or any
Restricted Subsidiary and SMI America, Inc. or any of its affiliates
pursuant to the terms of the Sumitomo Securities Purchase Agreement and any
documents relating thereto, as such Agreement and documents are in effect
on the Issue Date, without regard to any amendment, waiver or other
modification thereto.
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LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. LTV shall not, and shall not
permit any Restricted Subsidiary to, enter into any Sale and Leaseback
Transaction with respect to any Property unless:
(a) LTV or such Restricted Subsidiary would be entitled to:
(1) Incur Debt in an amount equal to the Attributable Debt with
respect to such Sale and Leaseback Transaction pursuant to the covenant
described under "Limitation on Debt and Restricted Subsidiary Preferred
Stock" and
(2) create a Lien on such Property securing such Attributable Debt
without securing the notes or any applicable Subsidiary Guaranty
pursuant to the covenant described under "Limitation on Liens" and
(b) such Sale and Leaseback Transaction is effected in compliance with
the covenant described under "Limitation on Asset Sales;"
provided, however, that LTV or any Restricted Subsidiary may at any time enter
into a Sale and Leaseback Transaction if the sum of (x) the aggregate amount of
Attributable Debt outstanding at such time with respect to such Sale and
Leaseback Transaction and all other Sale and Leaseback Transactions entered into
by LTV or any Restricted Subsidiary and (y) the aggregate principal amount (in
the case of Debt sold at a discount, at Stated Maturity) of all Secured Debt
outstanding at such time, other than the USWA Secured Obligations and any
Permitted Refinancing Debt in respect thereof to the extent not exceeding $250
million in the aggregate and any Limited Recourse Guarantee, does not exceed 10%
of Consolidated Net Tangible Assets as determined based on the consolidated
balance sheet of LTV as of the end of the most recent fiscal quarter, after
giving pro forma effect to such transaction.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES. The Board of
Directors may designate any Subsidiary of LTV to be an Unrestricted Subsidiary
if:
(a) the Subsidiary to be so designated does not own any Capital Stock
or Debt of, or own or hold any Lien on any Property of, LTV or any other
Restricted Subsidiary and
(b) either:
(1) the Subsidiary to be so designated has total assets of $1,000
or less or
(2) such designation is effective immediately upon such entity
becoming a Subsidiary of LTV or any Restricted Subsidiary.
Unless so designated as an Unrestricted Subsidiary, any Person that becomes
a Subsidiary of LTV or of any Wholly Owned Subsidiary will be classified as a
Restricted Subsidiary, provided that the requirements set forth in clauses (x)
and (y) of the immediately following paragraph would be satisfied after giving
pro forma effect to such classification. Any Person not permitted by the terms
of the immediately preceding sentence to be classified as a Restricted
Subsidiary shall be automatically classified as an Unrestricted Subsidiary.
Except as provided in the first sentence of this paragraph, no Restricted
Subsidiary may be redesignated as an Unrestricted Subsidiary. In addition,
neither LTV nor any Restricted Subsidiary shall at any time be directly or
indirectly liable for any Debt that provides that the holder of the Debt may
(with the passage of time or notice or both) declare a default on the Debt or
cause the payment of the Debt to be accelerated or payable prior to its Stated
Maturity upon the occurrence of a default with respect to any Debt, Lien or
other obligation
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of any Unrestricted Subsidiary (including any right to take enforcement action
against such Unrestricted Subsidiary, but excluding any Limited Recourse
Guarantee). Upon designation of a Restricted Subsidiary as an Unrestricted
Subsidiary in compliance with this covenant, such Restricted Subsidiary shall,
by execution and delivery of a supplemental Indenture in form satisfactory to
the Trustee, be released from any Subsidiary Guaranty previously made by such
Restricted Subsidiary.
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary if, immediately after giving pro forma effect to such
designation, (x) LTV could Incur at least $1.00 of additional Debt pursuant to
clause (a) of the first paragraph of the covenant described under "Limitation on
Debt and Restricted Subsidiary Preferred Stock" and (y) no Default or Event of
Default shall have occurred and be continuing or would result therefrom.
Any such designation or redesignation by the Board of Directors will be
evidenced to the Trustee by filing with the Trustee a Board Resolution giving
effect to such designation or redesignation and an Officers' Certificate:
(a) certifying that such designation or redesignation complies with
the foregoing provisions and
(b) giving the effective date of such designation or redesignation,
such filing with the Trustee to occur within 45 days after the end of the
fiscal quarter of LTV in which such designation or redesignation is made,
or, in the case of a designation or redesignation made during the last
fiscal quarter of LTV's fiscal year, within 90 days after the end of such
fiscal year.
Notwithstanding anything to the contrary in the foregoing, Presque Isle,
L-S Electro-Galvanizing Company, LTV-Trico, Inc., Cayman Mineracao do Brasil
Ltda and L.A.S. Resources, Inc. will initially be Unrestricted Subsidiaries.
LIMITATION ON LAYERED DEBT. LTV shall not permit any Acquired Subsidiary
Guarantor to Incur, directly or indirectly, any Debt that is subordinate or
junior in right of payment to any Senior Debt unless such debt is expressly
subordinated in right of payment to, or ranks pari passu with, the Obligations
under its Acquired Subsidiary Guaranty.
FUTURE SUBSIDIARY GUARANTORS. LTV shall cause each Person that becomes a
Domestic Wholly Owned Subsidiary following the Issue Date (other than any
Securitization Subsidiary or Inactive Subsidiary) or any Person that ceases to
be an Inactive Subsidiary to execute and deliver to the Trustee a Subsidiary
Guaranty at the time such Person becomes a Domestic Wholly Owned Subsidiary or
ceases to be an Inactive Subsidiary, as applicable.
MERGER, CONSOLIDATION AND SALE OF PROPERTY
LTV shall not merge, consolidate or amalgamate with or into any other
Person (other than a merger of a Wholly Owned Subsidiary into LTV) or sell,
transfer, assign, lease, convey or otherwise dispose of all or substantially all
its Property in any one transaction or series of transactions unless:
(a) LTV shall be the surviving Person (the "Surviving Person") or, if
other than LTV, the Surviving Person formed by the merger, consolidation or
amalgamation or to which the sale, transfer, assignment, lease, conveyance
or disposition is made shall be a
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corporation organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia;
(b) the Surviving Person, if other than LTV, expressly assumes, by
supplemental Indenture in form satisfactory to the Trustee, executed and
delivered to the Trustee by that Surviving Person, the due and punctual
payment of the principal of, and premium, if any, and interest on, all the
notes, according to their tenor, and the due and punctual performance and
observance of all the covenants and conditions of the Indenture to be
performed by LTV;
(c) in the case of a sale, transfer, assignment, lease, conveyance or
other disposition of all or substantially all LTV's Property, that Property
shall have been transferred as an entirety or virtually as an entirety to
one Person;
(d) immediately before and after giving effect to the transaction or
series of transactions on a pro forma basis (and treating, for purposes of
this clause (d) and clauses (e) and (f) below, any Debt which becomes, or
is anticipated to become, an obligation of the Surviving Person or any
Restricted Subsidiary as a result of the transaction or series of
transactions as having been Incurred by the Surviving Person or that
Restricted Subsidiary at the time of the transaction or series of
transactions), no Default or Event of Default shall have occurred and be
continuing;
(e) immediately after giving effect to the transaction or series of
transactions on a pro forma basis, LTV or the Surviving Person, as the case
may be, would be able to Incur at least $1.00 of additional Debt under
clause (a) of the first paragraph of the covenant described under "Certain
Covenants--Limitation on Debt and Restricted Subsidiary Preferred Stock";
(f) immediately after giving effect to the transaction or series of
transactions on a pro forma basis, the Surviving Person shall have a
Consolidated Net Worth in an amount which is not less than the Consolidated
Net Worth of LTV immediately prior to the transaction or series of
transactions; and
(g) LTV shall deliver, or cause to be delivered, to the Trustee, in
form and substance reasonably satisfactory to the Trustee, an Officers'
Certificate and an Opinion of Counsel, each stating that the transaction
and any supplemental Indenture in respect thereto comply with this covenant
and that all conditions precedent herein provided for relating to the
transaction have been satisfied.
LTV shall not permit LTV Steel or any Subsidiary then conducting all or
part of the Tubular Business to merge, consolidate or amalgamate with or into
any other Person (other than a merger of a Wholly Owned Subsidiary into LTV
Steel or a Subsidiary Guarantor then conducting all or part of the Tubular
Business, as applicable) or sell, transfer, assign, lease, convey or otherwise
dispose of all or substantially all the Property of LTV Steel or of the Tubular
Business, as applicable, in any one transaction or series of transactions
unless:
(a) the Surviving Person, if not LTV Steel or that Subsidiary, formed
by the merger, consolidation or amalgamation or to which the sale,
transfer, assignment, lease, conveyance or disposition is made shall be a
corporation organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia;
(b) the Surviving Person ,if other than LTV Steel or that Subsidiary,
expressly assumes, by supplemental Indenture in form satisfactory to the
Trustee, executed and
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delivered to the Trustee by that Surviving Person, the due and punctual
performance and observance of all the obligations of the entity under its
Subsidiary Guaranty;
(c) in the case of a sale, transfer, assignment, lease, conveyance or
other disposition of all or substantially all the Property of LTV Steel or
the Tubular Business, that Property shall have been transferred as an
entirety or virtually as an entirety to one Person;
(d) immediately before and after giving effect to the transaction or
series of transactions on a pro forma basis, and treating, for purposes of
this clause (d) and clauses (e) and (f) below, any Debt which becomes, or
is anticipated to become, an obligation of the Surviving Person, LTV or any
Restricted Subsidiary as a result of the transaction or series of
transactions as having been Incurred by the Surviving Person, LTV or that
Restricted Subsidiary at the time of that transaction or series of
transactions, no Default or Event of Default shall have occurred and be
continuing;
(e) immediately after giving effect to the transaction or series of
transactions on a pro forma basis, LTV would be able to Incur at least
$1.00 of additional Debt under clause (a) of the first paragraph of the
covenant described under "Certain Covenants -- Limitation on Debt and
Restricted Subsidiary Preferred Stock";
(f) immediately after giving effect to the transaction or series of
transactions on a pro forma basis, LTV shall have a Consolidated Net Worth
in an amount which is not less than the Consolidated Net Worth of LTV
immediately prior to that transaction or series of transactions; and
(g) LTV shall deliver, or cause to be delivered, to the Trustee, in
form and substance reasonably satisfactory to the Trustee, an Officers'
Certificate and an Opinion of Counsel, each stating that the transaction
and the supplemental Indenture, if any, in respect thereto comply with this
covenant and that all conditions precedent herein provided for relating to
the transaction have been satisfied. The foregoing provisions shall not
apply to any sale of less than substantially all the Tubular Business by
means of a merger, consolidation or amalgamation.
The Surviving Person will succeed to, and be substituted for, and may
exercise every right and power of LTV under the Indenture, or of the applicable
Subsidiary Guarantor under its Subsidiary Guaranty, as the case may be, but the
predecessor Company in the case of a sale, transfer, assignment, lease,
conveyance or other disposition, shall not be released from the obligations to
pay the principal of, and premium, if any, and interest on the notes.
SEC REPORTS
Notwithstanding that we may not be required to remain subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, we shall file
with, or furnish to, the Commission the annual reports and the information,
documents and other reports that are specified in Sections 13 and 15(d) of the
Exchange Act and applicable to a U.S. corporation subject to those Sections. The
information, documents and reports will be filed at the times specified for the
filing of the information, documents and reports under the Sections (the
"Required Filing Times"); provided, however, that we shall not be so obligated
to file the
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information, documents and reports with the SEC if the SEC does not permit those
filings. We shall also in any event:
(a) within 15 days of each Required Filing Time, provide the Trustee
and the holders of notes with copies of the information, documents and
reports and
(b) if the Commission does not permit the filing of the information,
documents and reports, promptly upon written request supply copies of the
information, documents and reports to any prospective holder of notes.
EVENTS OF DEFAULT
Events of Default in respect of the notes include:
(a) failure to make the payment of any interest on the notes when the
same becomes due and payable, and the failure continues for a period of 30
days;
(b) failure to make the payment of any principal of, or premium, if
any, on, any of the notes when the same becomes due and payable at its
Stated Maturity, upon acceleration, redemption, optional redemption,
mandatory redemption, required repurchase or otherwise;
(c) failure to comply with the covenant described above under "Merger,
Consolidation and Sale of Property";
(d) failure to comply with any other covenant or agreement in the
notes or in the Indenture, other than a failure which is the subject of the
foregoing clause (a), (b) or (c), and the failure continues for 30 days
after written notice is given to LTV as provided below;
(e) a default under any Debt by LTV or any Restricted Subsidiary which
results in acceleration of the maturity of that Debt, or failure to pay any
such Debt at maturity, in an aggregate amount greater than $20 million (the
"cross acceleration provisions");
(f) any judgment or judgments for the payment of money in an aggregate
amount in excess of $20 million shall be rendered against LTV or any
Restricted Subsidiary and shall not be waived, satisfied or discharged for
any period of 30 consecutive days during which a stay of enforcement shall
not be in effect (the "judgment default provisions");
(g) particular events involving bankruptcy, insolvency or
reorganization of LTV or any Significant Subsidiary (the "bankruptcy
provisions"); and
(h) any Subsidiary Guaranty ceases to be in full force and effect,
other than in accordance with the terms of the Indenture or that Subsidiary
Guaranty, or any Subsidiary Guarantor denies or disaffirms its obligations
under its Subsidiary Guaranty (the "guaranty provisions").
The Indenture provides that the Trustee may withhold notice to the holders
of the notes of any Default, except in payment of principal, premium, if any, or
interest, if the Trustee considers it to be in the best interest of the holders
of the notes to do so.
A Default under clause (d) is not an Event of Default until the Trustee or
the holders of not less than 25% in aggregate principal amount of the notes then
outstanding notify LTV of the Default and LTV does not cure that Default within
the time specified after receipt of the
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notice. The notice must specify the Default, demand that it be remedied and
state that the notice is a "Notice of Default".
LTV shall deliver to the Trustee, within 30 days after the occurrence
thereof, written notice in the form of an Officers' Certificate of any event
which with the giving of notice and the lapse of time would become an Event of
Default, its status and what action LTV is taking or proposes to take with
respect thereto.
The Indenture will provide that if an Event of Default with respect to the
notes, other than an Event of Default resulting from particular events involving
bankruptcy, insolvency or reorganization with respect to LTV or any Significant
Subsidiary, shall have occurred and be continuing, the Trustee or the registered
holders of not less than 25% in aggregate principal amount of the notes then
outstanding may declare to be immediately due and payable the principal amount
of all the notes then outstanding, plus accrued but unpaid interest to the date
of acceleration. In case an Event of Default resulting from particular events of
bankruptcy, insolvency or reorganization with respect to LTV or any Significant
Subsidiary shall occur, the amount with respect to all the notes shall be due
and payable immediately without any declaration or other act on the part of the
Trustee or the holders of the notes. The holders of a majority in aggregate
principal amount of the outstanding notes may, by notice to the Trustee and LTV,
rescind any declaration of acceleration if the rescission would not conflict
with any judgment or decree, and if all existing Events of Default have been
cured or waived except nonpayment of principal or interest that has become due
solely because of the acceleration. This rescission shall not affect any
subsequent Default or impair any right consequent thereto.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the holders of the notes, unless
those holders shall have offered to the Trustee reasonable indemnity. Subject to
those provisions for the indemnification of the Trustee, the holders of a
majority in aggregate principal amount of the notes then outstanding will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
on the Trustee with respect to the notes.
No holder of notes will have any right to institute any proceeding with
respect to the Indenture, or for the appointment of a receiver or trustee, or
for any remedy thereunder, unless:
(a) that holder has previously given to the Trustee written notice of
a continuing Event of Default,
(b) the registered holders of at least 25% in aggregate principal
amount of the notes then outstanding have made written request and offered
reasonable indemnity to the Trustee to institute that proceeding as
trustee, and
(c) the Trustee shall not have received from the registered holders of
a majority in aggregate principal amount of the notes then outstanding a
direction inconsistent with the request and shall have failed to institute
the proceeding within 60 days.
However, these limitations do not apply to a suit instituted by a holder of
any note for enforcement of payment of the principal of, and premium, if any, or
interest on, that note on or after the respective due dates expressed in that
note.
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AMENDMENTS AND WAIVERS
Subject to some exceptions, the Indenture may be amended with the consent
of the registered holders of a majority in aggregate principal amount of the
notes then outstanding, including consents obtained in connection with a tender
offer or exchange offer for the notes, and any past default or compliance with
any provisions may also be waived (except a default in the payment of principal,
premium or interest and particular covenants and provisions of the Indenture
which cannot be amended without the consent of each holder of an outstanding
note) with the consent of the registered holders of at least a majority in
aggregate principal amount of the notes then outstanding. However, without the
consent of each holder of an outstanding note, no amendment may, among other
things:
(a) reduce the amount of notes whose holders must consent to an
amendment or waiver,
(b) reduce the rate of or extend the time for payment of interest on
any note,
(c) reduce the principal of or extend the Stated Maturity of any note,
(d) make any note payable in money other than that stated in the note,
(e) impair the right of any holder of the notes to receive payment of
principal of and interest on that holder's notes on or after the due dates
for payment or to institute suit for the enforcement of any payment on or
with respect to that holder's notes or any Subsidiary Guaranty,
(f) subordinate the notes or any Subsidiary Guaranty to any other
obligation of LTV or the applicable Subsidiary Guarantor,
(g) release any security interest that may have been granted in favor
of the holders of the notes other than pursuant to the terms of that
security interest, including the security interest under the Escrow
Agreement described in "Escrow of Proceeds; Special Mandatory Redemption",
(h) reduce the premium payable upon the redemption or repurchase of
any note as described under "Optional Redemption" or "Repurchase at the
Option of Holders Upon a Change of Control",
(i) at any time after a Change of Control or Asset Sale has occurred,
change the time at which the Change of Control Offer or Prepayment Offer
relating thereto must be made or at which the notes must be repurchased
pursuant to the Change of Control Offer or Prepayment Offer,
(j) reduce the premium payable upon a Special Mandatory Redemption or
make any other change in the provisions relating to the Special Mandatory
Redemption, including changing the time by which notes must be redeemed,
(k) make any change to the subordination provisions of the Indenture
with respect to the Acquired Subsidiary Guaranties that would adversely
affect the holders of the notes,
(l) make any change in the Escrow Agreement that would adversely
affect holders of the notes or
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(m) make any change in any Subsidiary Guaranty that could adversely
affect the holders of the notes.
Without the consent of any holder of the notes, LTV and the Trustee may
amend the Indenture to cure any ambiguity, omission, defect or inconsistency, to
provide for the assumption by a successor corporation of the obligations of LTV,
LTV Steel or any Subsidiary then conducting all or part of the Tubular Business
under the Indenture, to provide for uncertificated notes in addition to or in
place of certificated notes (provided that the uncertificated notes are issued
in registered form for purposes of Section 163(f) of the Code, or in a manner
such that the uncertificated notes are described in Section 163(f)(2)(B) of the
Code), to add additional guarantees with respect to the notes or to release
Subsidiary Guarantors from the Subsidiary Guaranties as provided by the terms of
the Indenture, to secure the notes, to add to the covenants of LTV for the
benefit of the holders of the notes or to surrender any right or power conferred
upon LTV, to make any change that does not adversely affect the rights of any
holder of the notes, to make any change to the subordination provisions of the
Indenture with respect to the Acquired Subsidiary Guaranties that would limit or
terminate the benefits available to holders of Designated Senior Debt under
those provisions, to comply with any requirement of the Commission in connection
with the qualification of the Indenture under the Trust Indenture Act or to
provide for the issuance of additional notes in accordance with the Indenture.
No amendment may be made to the subordination provisions of the Indenture
with respect to the Subsidiary Guaranties of the Acquired Subsidiaries that
adversely affects the rights of holders of Designated Senior Debt unless the
holders of the Designated Senior Debt or their Representative consent to the
change.
The consent of the holders of the notes is not necessary under the
Indenture to approve the particular form of any proposed amendment. It is
sufficient if the consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, LTV is required
to mail to each registered holder of the notes at the holder's address appearing
in the Security Register a notice briefly describing the amendment. However, the
failure to give this notice to all holders of the notes, or any defect therein,
will not impair or affect the validity of the amendment.
DEFEASANCE
LTV at any time may terminate all its obligations under the notes and the
Indenture ("legal defeasance"), except for particular obligations, including
those respecting the defeasance trust and obligations to register the transfer
or exchange of the notes, to replace mutilated, destroyed, lost or stolen notes
and to maintain a registrar and paying agent in respect of the notes. LTV at any
time may terminate its obligations under the covenants described under
"Repurchase at the Option of Holders Upon a Change of Control" and "Certain
Covenants", the operation of the cross acceleration provisions, the judgment
default provisions, the bankruptcy provisions with respect to Significant
Subsidiaries and the guaranty provisions described under "Events of Default"
above and the limitations contained in clauses (e) and (f) under the first
paragraph, or contained in the second paragraph, of "Merger, Consolidation and
Sale of Property" above ("covenant defeasance"). LTV may exercise its legal
defeasance option notwithstanding its prior exercise of its covenant defeasance
option.
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If LTV exercises its legal defeasance option, payment of the notes may not
be accelerated because of an Event of Default with respect thereto. If LTV
exercises its covenant defeasance option, payment of the notes may not be
accelerated because of an Event of Default specified in clause (d) (with respect
to the covenants described under "Certain Covenants"), (e), (f), (g) (with
respect only to Significant Subsidiaries) or (h) under "Events of Default" above
or because of the failure of LTV to comply with clauses (e) and (f) under the
first paragraph, or with the second paragraph, of "Merger, Consolidation and
Sale of Property" above. If LTV exercises its legal or covenant defeasance
option, each Subsidiary Guarantor will be released from all its obligations
under its Subsidiary Guaranty.
In order to exercise either defeasance option, LTV must, among other
things, irrevocably deposit in trust (the "defeasance trust") with the Trustee
money or U.S. Government Obligations for the payment of principal and interest
on the notes to maturity or redemption, as the case may be, and must comply with
some other conditions, including delivery to the Trustee of an Opinion of
Counsel to the effect that holders of the notes will not recognize income, gain
or loss for Federal income tax purposes as a result of the deposit and
defeasance and will be subject to Federal income tax on the same amounts and in
the same manner and at the same times as would have been the case if the deposit
and defeasance had not occurred. In the case of legal defeasance only, the
Opinion of Counsel must be based on a ruling of the Internal Revenue Service or
other change in applicable Federal income tax law.
BOOK-ENTRY SYSTEM
The old notes were, and the new notes will initially be issued in the form
of one or more global securities registered in the name of The Depository Trust
Company or its nominee.
Upon the issuance of a global security, DTC or its nominee will credit the
accounts of Persons holding through it with the respective principal amounts of
the new notes represented by the global security. Ownership of beneficial
interests in a global security will be limited to Persons that have accounts
with DTC ("participants") or Persons that may hold interests through
participants. Any Person acquiring an interest in a global security through an
offshore transaction in reliance on Regulation S under the Securities Act may
hold that interest through Cedel or Euroclear. Ownership of beneficial interests
in a global security will be shown on, and the transfer of that ownership
interest will be effected only through, records maintained by DTC with respect
to participants' interests and by the participants with respect to the owners of
beneficial interests in that global security other than participants. The laws
of some jurisdictions require that particular purchasers of securities take
physical delivery of the securities in definitive form. These limits and laws
may impair the ability to transfer beneficial interests in a global security.
Payment of principal of and interest on notes represented by a global
security will be made in immediately available funds to DTC or its nominee, as
the case may be, as the sole registered owner and the sole holder of the notes
represented by the global security for all purposes under the Indenture. We have
been advised by DTC that upon receipt of any payment of principal of or interest
on any global security, DTC will immediately credit, on its book-entry
registration and transfer system, the accounts of participants with payments in
amounts proportionate to their respective beneficial interests in the principal
or face amount of that global security as shown on the records of DTC. Payments
by participants to owners of beneficial interests in a global security held
through those participants will be governed by
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standing instructions and customary practices as is now the case with securities
held for customer accounts registered in "street name" and will be the sole
responsibility of those participants.
A global security may not be transferred except as a whole by DTC or a
nominee of DTC to a nominee of DTC or to DTC. A global security is exchangeable
for certificated notes only if (a) DTC notifies us that it is unwilling or
unable to continue as a depositary for the global security or if at any time DTC
ceases to be a clearing agency registered under the Exchange Act, (b) we in our
discretion at any time determine not to have all the notes represented by the
global security or (c) there shall have occurred and be continuing a Default or
an Event of Default with respect to the notes represented by the global
security. Any global security that is exchangeable for certificated notes
pursuant to the preceding sentence will be exchanged for certificated notes in
authorized denominations and registered in such names as DTC or any successor
depositary holding that global security may direct. Subject to the foregoing, a
global security is not exchangeable, except for a global security of like
denomination to be registered in the name of DTC or any successor depositary or
its nominee. In the event that a global security becomes exchangeable for
certificated notes,
(a) certificated notes will be issued only in fully registered form in
denominations of $1,000 or integral multiples thereof;
(b) payment of principal of, and premium, if any, and interest on, the
certificated notes will be payable, and the transfer of the certificated
notes will be registerable, at the office or agency of LTV maintained for
those purposes; and
(c) no service charge will be made for any registration of transfer or
exchange of the certificated notes, although We may require payment of a
sum sufficient to cover any tax or governmental charge imposed in
connection therewith.
So long as DTC or any successor depositary for a global security, or any
nominee, is the registered owner of the global security, DTC or the successor
depositary or nominee, as the case may be, will be considered the sole owner or
holder of the notes represented by that global security for all purposes under
the Indenture and the notes. Except as set forth above, owners of beneficial
interests in a global security will not be entitled to have the notes
represented by the global security registered in their names, will not receive
or be entitled to receive physical delivery of certificated notes in definitive
form and will not be considered to be the owners or holders of any notes under
the global security. Accordingly, each Person owning a beneficial interest in a
global security must rely on the procedures of DTC or any successor depositary,
and, if that Person is not a participant, on the procedures of the participant
through which that Person owns its interest, to exercise any rights of a holder
under the Indenture. We understand that under existing industry practices, in
the event that LTV request any action of holders or that an owner of a
beneficial interest in a global security desires to give or take any action
which a holder is entitled to give or take under the Indenture, DTC or any
successor depositary would authorize the participants holding the relevant
beneficial interest to give or take that action and the participants would
authorize beneficial owners owning through those participants to give or take
that action or would otherwise act upon the instructions of beneficial owners
owning through them.
DTC has advised us that DTC is a limited-purpose trust company organized
under the Banking Law of the State of New York, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered under the Exchange Act. DTC
was created to hold the
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securities of its participants and to facilitate the clearance and settlement of
securities transactions among its participants in those securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and some other organizations some of whom, or their
representatives, own DTC. Access to DTC's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in global securities among participants of DTC, it is
under no obligation to perform or continue to perform those procedures, and the
procedures may be discontinued at any time. Neither we nor the Trustee will have
any responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
GOVERNING LAW
The Indenture and the notes are governed by the internal laws of the State
of New York without reference to principles of conflicts of law.
THE TRUSTEE
U.S. Bank Trust National Association will be the Trustee under the
Indenture.
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only the duties that are specifically set
forth in the Indenture. During the existence of an Event of Default, the Trustee
will exercise those rights and powers vested in it under the Indenture and use
the same degree of care and skill in its exercise as a prudent Person would
exercise under the circumstances in the conduct of that Person's own affairs.
CERTAIN DEFINITIONS
Set forth below is a summary of some of the defined terms used in the
Indenture and referred to in this "Description of Notes."
"Acquired Subsidiary Guarantors" means each of Copperweld Corporation and
Welded Tube Company of America and each of their respective Domestic Wholly
Owned Subsidiaries (other than a Securitization Subsidiary or Inactive
Subsidiary).
"Additional Assets" means
(a) any Property (other than cash, cash equivalents or securities) to
be owned by LTV or any Restricted Subsidiary; or
(b) Capital Stock of a Person that becomes a Restricted Subsidiary as
a result of the acquisition of such Capital Stock by LTV or another
Restricted Subsidiary from any Person other than LTV or an Affiliate of
LTV.
"Affiliate" of any specified Person means (a) any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person or (b) any other Person who is a director or
officer of (i) such specified Person, (ii) any Subsidiary of such specified
Person or (iii) any Person described in clause (a) above.
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For the purposes of this definition, "control" when used with respect to any
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing. For purposes of the covenants described
under "Certain Covenants -- Limitation on Transactions with Affiliates",
"Limitation on Asset Sales" and the definition of the term "Additional Assets"
only, "Affiliate" shall also mean any beneficial owner of shares representing 5%
or more of the total voting power of the Voting Stock (on a fully diluted basis)
of LTV or of rights or warrants to purchase such Voting Stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Asset Sale" means any sale, lease, transfer, issuance or other disposition
(or series of related sales, leases, transfers, issuances or dispositions) by
LTV or any Restricted Subsidiary, including any disposition by means of a
merger, consolidation or similar transaction or by means of a disposition of
Capital Stock permitted by clause (iii) of the covenant described under "Certain
Covenants -- Limitation on Issuance and Sale of Capital Stock of Restricted
Subsidiaries" (each referred to for the purposes of this definition as a
"disposition"), of (a) any shares of Capital Stock of a Restricted Subsidiary
(other than directors' qualifying shares), (b) all or substantially all the
assets of any division or line of business of LTV or any Restricted Subsidiary
(other than LTV Steel or the Tubular Business) or (c) any other assets of LTV or
any Restricted Subsidiary outside of the ordinary course of business of LTV or
such Restricted Subsidiary (other than (i) in the case of clauses (a), (b) and
(c) above, any disposition by a Restricted Subsidiary to LTV or by LTV or a
Restricted Subsidiary to a Wholly Owned Subsidiary, (ii) in the case of clauses
(b) and (c) above, (x) any disposition of accounts receivable or inventory by or
to LTV or any Restricted Subsidiary to or from any Securitization Subsidiary in
connection with the Incurrence of Debt by such Subsidiary under Credit
Facilities or (y) any disposition of Property having, together with other
Property disposed of pursuant to such clauses during the same fiscal year, an
aggregate Fair Market Value of less than $25 million and (iii) in the case of
clauses (a), (b) and (c) above, any disposition subject to the first or second
paragraph of the covenant described under "Merger, Consolidation and Sale of
Property").
"Attributable Debt" in respect of a Sale and Leaseback Transaction means,
at any date of determination, (a) if such Sale and Leaseback Transaction is a
Capital Lease Obligation, the amount of Debt represented thereby according to
the definition of the term "Capital Lease Obligation" and (b) in all other
instances, the present value (discounted at the actual rate of interest implicit
in such transaction, compounded annually) of the total obligations of the lessee
for rental payments during the remaining term of the lease included in such Sale
and Leaseback Transaction (including any period for which such lease has been
extended).
"Average Life" means, as of any date of determination, with respect to any
Debt or Preferred Stock, the quotient obtained by dividing (a) the sum of the
product of the numbers of years (rounded to the nearest one-twelfth of one year)
from the date of determination to the dates of each successive scheduled
principal payment of such Debt or redemption or similar payment with respect to
such Preferred Stock multiplied by the amount of such payment by (b) the sum of
all such payments.
"Board of Directors" means the Board of Directors of LTV or any committee
thereof duly authorized to act on behalf of such Board.
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"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of LTV to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification.
"Capital Expenditure Debt" means Debt Incurred by any Person to finance a
capital expenditure so long as (a) such capital expenditure is or should be
included as an addition to "Property, Plant and Equipment" in accordance with
GAAP (including in any event an addition to Property as a result of the purchase
or other acquisition of Capital Stock of a Person that becomes a Subsidiary
Guarantor as a result of such purchase or acquisition by LTV or another
Subsidiary Guarantor from any Person other than LTV or an Affiliate of LTV) and
(b) such Debt is Incurred within 180 days of the date such capital expenditure
is made.
"Capital Lease Obligations" means any obligation under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP; and the amount of Debt represented by such obligation shall be the
capitalized amount of such obligations determined in accordance with GAAP; and
the Stated Maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty. For purposes of
"Certain Covenants -- Limitation on Liens", a Capital Lease Obligation shall be
deemed secured by a Lien on the Property being leased.
"Capital Stock" means, with respect to any Person, any shares or other
equivalents (however designated) of corporate stock, partnership interests or
any other participations, rights, warrants, options or other interests in the
nature of an equity interest in such Person, including Preferred Stock, but
excluding any debt security convertible or exchangeable into such equity
interest.
"Capital Stock Sale Proceeds" means the aggregate Net Cash Proceeds
received by LTV from the issuance or sale (other than to a Subsidiary of LTV or
an employee stock ownership plan or trust established by LTV or any of its
Subsidiaries for the benefit of their employees) by LTV of any class of its
Capital Stock (other than Disqualified Stock) after the Issue Date of LTV's
8.20% Senior Notes due 2007.
"Cash Equivalents" means any of the following: (i) direct obligations of
the United States of America or any agency thereof or obligations fully and
unconditionally guaranteed by the United States of America or any agency
thereof; (ii) direct obligations of Canada or any agency thereof or obligations
fully and unconditionally guaranteed by Canada or any agency thereof; (iii) time
deposit accounts, certificates of deposit and money market deposits maturing
within 270 days of the date of acquisition thereof issued by a bank or trust
company which is organized under the laws of the United States of America or any
state thereof, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $500 million and has outstanding Debt
which is rated "A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule 436
under the Securities Act) or any money-market fund having assets in excess of
$500 million all of which consist of other obligations described in (i), (ii),
(iii), (iv), (v) or (vi) sponsored by a registered broker dealer or mutual fund
distributor; (iv) repurchase and reverse repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in clause
(i) above entered into with a bank meeting the qualifications described in
clause (iii) above; (v) commercial paper, maturing not more than 180 days after
the date of acquisition, issued by a corporation (other than an Affiliate of
LTV) organized and in existence under the laws of the United States of
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America or any state thereof with a rating at the time as of which any
investment therein is made of "P-2" (or higher) according to Moody's or "A-2"
(or higher) according to S&P; and (vi) securities with maturities of one year or
less from the date of acquisition issued or fully and unconditionally guaranteed
by any state, commonwealth or territory of the United States of America or by
any political division or taxing authority thereof, and rated at least "A" by
Moody's or S&P, provided that all Cash Equivalents purchased or otherwise
acquired by the Escrow Agent as contemplated under "Escrow of Proceeds; Special
Mandatory Redemption" shall mature on or prior to the Assumed Redemption Date.
"Change of Control" means the occurrence of any of the following events:
(a) if any "Person" or "group" (as such terms are used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act or any successor provisions to
either of the foregoing), including any group acting for the purpose of
acquiring, holding, voting or disposing of securities within the meaning of
Rule 13d-5(b)(1) under the Exchange Act, becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, except that a Person will be
deemed to have "beneficial ownership" of all shares that any such Person
has the right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of 50% or more of
the total voting power of all classes of the Voting Stock of LTV (for
purposes of this clause (a), such other Person or group shall be deemed to
beneficially own any Voting Stock of a corporation (the "specified
corporation") held by any other corporation (the "parent corporation") so
long as such other Person or group beneficially owns, directly or
indirectly, in the aggregate a majority of the voting power of all classes
of the Voting Stock of such parent corporation); or
(b) the sale, transfer, assignment, lease, conveyance or other
disposition, directly or indirectly, of all or substantially all the assets
of LTV and the Restricted Subsidiaries, considered as a whole (other than a
disposition of such assets as an entirety or virtually as an entirety to a
Wholly Owned Subsidiary) shall have occurred, or LTV merges, consolidates
or amalgamates with or into any other Person or any other Person merges,
consolidates or amalgamates with or into LTV, in any such event pursuant to
a transaction in which the outstanding Voting Stock of LTV is reclassified
into or exchanged for cash, securities or other Property, other than any
such transaction where (i) the outstanding Voting Stock of LTV is
reclassified into or exchanged for Voting Stock of the surviving
corporation and (ii) the Holders of the Voting Stock of LTV immediately
prior to such transaction own, directly or indirectly, not less than a
majority of the Voting Stock of the surviving corporation immediately after
such transaction and in substantially the same proportion as before the
transaction; or
(c) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together with
any new directors whose election or appointment by such Board or whose
nomination for election by the shareholders of LTV was approved by a vote
of 66 2/3% of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office; or
(d) the shareholders of LTV shall have approved any plan of
liquidation or dissolution of LTV.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Collateral Trust Agreement" means the Collateral Trust Agreement dated as
of May 15, 1993, as amended through the Issue Date, among LTV, LTV Steel
Company, Inc., the USWA and Bank One Ohio Trust Company, N.A., as collateral
trustee.
"Commodity Price Protection Agreement" means, in respect of a Person, any
forward contract, commodity swap agreement, commodity option agreement or other
similar agreement or arrangement designed to protect such Person against
fluctuations in commodity prices.
"Consolidated Current Liabilities" means, as of any date of determination,
the aggregate amount of liabilities of LTV and its consolidated Restricted
Subsidiaries which may properly be classified as current liabilities (including
taxes accrued as estimated), after eliminating (a) all intercompany items
between LTV and any Restricted Subsidiary or between Restricted Subsidiaries and
(b) all current maturities of long-term Debt.
"Consolidated Interest Coverage Ratio" means, as of any date of
determination, the ratio of (a) the aggregate amount of EBITDA for the period of
the most recent four consecutive fiscal quarters ending at least 45 days prior
to such determination date to (b) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that (i) if LTV or any Restricted Subsidiary
has Incurred any Debt since the beginning of such period that remains
outstanding or if the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio is an Incurrence of Debt, or both,
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to such Debt as if such Debt had been Incurred on
the first day of such period and the discharge of any other Debt repaid,
repurchased, defeased or otherwise discharged with the proceeds of such new Debt
as if such discharge had occurred on the first day of such period, (ii) if since
the beginning of such period LTV or any Restricted Subsidiary shall have made
any Asset Sale or if the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio is an Asset Sale, or both, EBITDA for such
period shall be reduced by an amount equal to the EBITDA (if positive) directly
attributable to the assets which are the subject of such Asset Sale for such
period, or increased by an amount equal to the EBITDA (if negative) directly
attributable thereto for such period, in either case as if such Asset Sale had
occurred on the first day of such period and Consolidated Interest Expense for
such period shall be reduced by an amount equal to the Consolidated Interest
Expense directly attributable to any Debt of LTV or any Restricted Subsidiary
repaid, repurchased, defeased or otherwise discharged with respect to LTV and
its continuing Restricted Subsidiaries in connection with such Asset Sale for
such period, as if such Asset Sale had occurred on the first day of such period
(or, if the Capital Stock of any Restricted Subsidiary is sold, by an amount
equal to the Consolidated Interest Expense for such period directly attributable
to the Debt of such Restricted Subsidiary to the extent LTV and its continuing
Restricted Subsidiaries are no longer liable for such Debt after such sale),
(iii) if since the beginning of such period LTV or any Restricted Subsidiary (by
merger or otherwise) shall have made an Investment in any Restricted Subsidiary
(or any Person which becomes a Restricted Subsidiary) or an acquisition of
Property, including any acquisition of Property occurring in connection with a
transaction causing a calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, EBITDA and Consolidated
Interest Expense for such period shall be calculated after giving pro forma
effect thereto (including the Incurrence of any Debt) as if such Investment or
acquisition occurred on the first day of such period and (iv) if since the
beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into LTV or any Restricted Subsidiary since the
beginning of such period) shall have made any Asset Sale, Investment or
acquisition
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of Property that would have required an adjustment pursuant to clause (ii) or
(iii) above if made by LTV or a Restricted Subsidiary during such period, EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto as if such Asset Sale, Investment or acquisition
occurred on the first day of such period. For purposes of this definition,
whenever pro forma effect is to be given to an acquisition of Property, the
amount of income or earnings relating thereto and the amount of Consolidated
Interest Expense associated with any Debt incurred in connection therewith, the
pro forma calculations shall be determined in good faith by a responsible
financial or accounting Offic er and as further contemplated by the definition
of the term "pro forma". If any Debt bears a floating rate of interest and is
being given pro forma effect, the interest expense on such Debt shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any Interest Rate
Agreement applicable to such Debt if such Interest Rate Agreement has a
remaining term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total interest
expense of LTV and its consolidated Restricted Subsidiaries, plus, to the extent
not included in such total interest expense, and to the extent Incurred by LTV
or its Restricted Subsidiaries, (a) interest expense attributable to capital
leases, (b) amortization of debt discount and debt issuance cost, (c)
capitalized interest, (d) non-cash interest expenses, (e) commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, (f) net costs associated with Hedging Obligations
(including amortization of fees), (g) Redeemable Dividends, (h) Preferred Stock
dividends in respect of all Preferred Stock of Restricted Subsidiaries held by
Persons other than LTV or a Wholly Owned Subsidiary, (i) interest incurred in
connection with Investments in discontinued operations, (j) interest accruing on
any Debt of any other Person to the extent such Debt is guaranteed by LTV or any
Restricted Subsidiary (such amount included, if such Debt is also guaranteed by
a venture partner or other equity owner of such Person that is capable of
satisfying its obligations under such guarantee (as determined by an Officer in
good faith at the time of any relevant determination), only to the extent of
LTV's direct or indirect equity ownership of such Person) and (k) the cash
contributions to any employee stock ownership plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or fees
to any Person (other than LTV) in connection with Debt Incurred by such plan or
trust.
"Consolidated Net Income" means, for any period, the net income (loss) of
LTV and its consolidated Subsidiaries; provided, however, that there shall not
be included in such Consolidated Net Income (a) any net income (loss) of any
Person (other than LTV) if such Person is not a Restricted Subsidiary, except
that (i) subject to the exclusion contained in clause (d) below, LTV's equity in
the net income of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash distributed by such
Person during such period to LTV or a Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other distribution to
a Restricted Subsidiary, to the limitations contained in clause (c) below) and
(ii) LTV's equity in a net loss of any such Person (other than an Unrestricted
Subsidiary) for such period shall be included in determining such Consolidated
Net Income, (b) any net income (loss) of any Person acquired by LTV or any of
its consolidated Subsidiaries in a pooling of interests transaction for any
period prior to the date of such acquisition, (c) any net income (loss) of any
Restricted Subsidiary to the extent that such Restricted Subsidiary is subject
to restrictions, directly or indirectly, on the payment of dividends or the
making of distributions, directly or indirectly, to LTV, except that (i) subject
to the exclusion contained in clause (d) below, LTV's equity in the net income
of any such Restricted Subsidiary for such period shall be included in such
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Consolidated Net Income up to the aggregate amount of cash distributed by such
Restricted Subsidiary during such period to LTV or another Restricted Subsidiary
as a dividend or other distribution (subject, in the case of a dividend or other
distribution to another Restricted Subsidiary, to the limitation contained in
this clause) and (ii) LTV's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining such Consolidated
Net Income, (d) any gain (but not loss) realized upon the sale or other
disposition of any Property of LTV or any of its consolidated Subsidiaries
(including pursuant to any Sale and Leaseback Transaction) which is not sold or
otherwise disposed of in the ordinary course of business, (e) any extraordinary
gain or loss, (f) any unusual or nonrecurring non-cash charge or credit
separately identified on LTV's consolidated income statement for such period,
provided that (i) to the extent any such charge represents an accrual of or
reserve for cash expenditures in any future period, such cash expenditure shall
be included in Consolidated Net Income for such future period or (ii) for
purposes of the covenant described under "Certain Covenants--Limitation on
Restricted Payments" only, to the extent any such credit will result in the
receipt of cash payments in any future period, such cash payment shall be
included in Consolidated Net Income for such future period, (g) the cumulative
effect of a change in accounting principles and (h) any non-cash compensation
expense realized for grants of performance shares, stock options or other stock
awards to officers, directors and employees of LTV or any Restricted Subsidiary;
provided further, however, that there shall be added to such Consolidated Net
Income any provision for taxes not payable in cash.
"Consolidated Net Tangible Assets" means, as of any date of determination,
the sum of the amounts that would appear on a consolidated balance sheet of LTV
and its consolidated Restricted Subsidiaries as the total assets (less
accumulated depreciation, depletion and amortization, allowances for doubtful
receivables, adjustments for pension liabilities, other applicable reserves and
other properly deductible items) of LTV and its Restricted Subsidiaries, after
giving effect to purchase accounting and after deducting therefrom Consolidated
Current Liabilities and, to the extent otherwise included, the amounts of
(without duplication): (a) the excess of cost over fair market value of assets
or businesses acquired; (b) any revaluation or other write-up in book value of
assets subsequent to the last day of the fiscal quarter of LTV immediately
preceding the Issue Date as a result of a change in the method of valuation in
accordance with GAAP; (c) unamortized debt discount and expenses and other
unamortized deferred charges, goodwill, patents, trademarks, service marks,
trade names, copyrights, licenses, organization or developmental expenses and
other intangible items; (d) minority interests in consolidated Subsidiaries held
by Persons other than LTV or any Restricted Subsidiary; (e) treasury stock; (f)
cash or securities set aside and held in a sinking or other analogous fund
established for the purpose of redemption or other retirement of Capital Stock
to the extent such obligation is not reflected in Consolidated Current
Liabilities; and (g) Investments in and assets of Unrestricted Subsidiaries.
"Consolidated Net Worth" means the total of the amounts shown on the
consolidated balance sheet of LTV and its Restricted Subsidiaries as of the end
of the most recent fiscal quarter of LTV ending at least 45 days prior to the
taking of any action for the purpose of which the determination is being made,
as (a) the par or stated value of all outstanding Capital Stock of LTV plus (b)
paid-in capital or capital surplus relating to such Capital Stock plus (c) any
retained earnings or earned surplus less (i) any accumulated deficit, (ii) any
amounts attributable to Disqualified Stock and (iii) any adjustments for pension
liabilities.
"Copperweld Acquisition" means the acquisition by LTV of Copperweld
Corporation and Copperweld Canada Inc. pursuant to the Copperweld Acquisition
Agreement.
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"Copperweld Acquisition Agreement" means the Stock Purchase Agreement by
and between Imetal SA and LTV dated as of September 8, 1999, as amended, waived
or otherwise modified through the Issue Date.
"Credit Facilities" means, with respect to LTV or any Restricted
Subsidiary, one or more credit facilities or securitization facilities with
banks or other institutional lenders providing for revolving credit loans, term
loans, receivables or inventory financing (including the Existing Securitization
Facilities) or trade letters of credit, in each case together with any
extensions, revisions, refinancings or replacements thereof.
"Currency Exchange Protection Agreement" means, in respect of a Person, any
foreign exchange contract, currency swap agreement, currency option or other
similar agreement or arrangement designed to protect such Person against
fluctuations in currency exchange rates.
"Debt" means, with respect to any Person on any date of determination
(without duplication), (a) the principal of and premium (if any) in respect of
(i) debt of such Person for money borrowed and (ii) debt evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
Person is responsible or liable; (b) all Capital Lease Obligations of such
Person and all Attributable Debt in respect of Sale and Leaseback Transactions
entered into by such Person; (c) all obligations of such Person issued or
assumed as the deferred purchase price of Property, all conditional sale
obligations of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (d) all obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (a) through (c)
above) entered into in the ordinary course of business of such Person to the
extent such letters of credit are not drawn upon or, if and to the extent drawn
upon, such drawing is reimbursed no later than the tenth Business Day following
receipt by such Person of a demand for reimbursement following payment on the
letter of credit); (e) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of such Person, any Preferred Stock (but
excluding, in each case, any accrued dividends); (f) all obligations of the type
referred to in clauses (a) through (e) of other Persons and all dividends of
other Persons for the payment of which, in either case, such Person is
responsible or liable, directly or indirectly, as obligor, guarantor or
otherwise, including by means of any guarantee; (g) all obligations of the type
referred to in clauses (a) through (f) of other Persons secured by any Lien on
any Property or asset of such Person (whether or not such obligation is assumed
by such Person), the amount of such obligation being deemed to be the lesser of
the value of such Property or assets or the amount of the obligation so secured;
(h) to the extent not otherwise included in this definition, Hedging Obligations
of such Person; and (i) to the extent not otherwise included in this definition,
any financing of accounts receivable or inventory of such Person (whether or not
treated as a sale or debt for accounting purposes), provided that such accounts
receivable or inventory shall be deemed to be on the consolidated balance sheet
of LTV for purposes of clause (b)(ii) of the definition of "Permitted Debt". The
amount of Debt of any Person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
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"Designated Senior Debt" means, with respect to each Acquired Subsidiary
Guarantor, all Debt and other obligations of such Acquired Subsidiary Guarantor
under the New Bank Financing and any Permitted Refinancing Debt in respect
thereof, whether outstanding on the Issue Date or thereafter created.
"Disqualified Stock" means, with respect to any Person, Redeemable Stock of
such Person as to which the maturity, mandatory redemption, redemption at the
option of the Holder thereof, conversion or exchange occurs, or may occur, on or
prior to the first anniversary of the Stated Maturity of the notes; provided,
however, that Redeemable Stock of such Person that would not otherwise be
characterized as Disqualified Stock under this definition shall not constitute
Disqualified Stock if such Redeemable Stock is convertible or exchangeable into
Debt solely at the option of the issuer thereof.
"Domestic" means, with respect to any Subsidiary, any Subsidiary that is
organized under the laws of the United States of America or any state thereof or
the District of Columbia.
"EBITDA" means, for any period, an amount equal to, for LTV and its
consolidated Restricted Subsidiaries, (a) the sum of Consolidated Net Income for
such period, plus the following to the extent reducing Consolidated Net Income
for such period: (i) the provision for taxes for such period based on income or
profits or utilized in computing net loss, (ii) Consolidated Interest Expense,
(iii) depreciation and amortization of fixed and intangible assets and (iv) any
other non-cash items (other than any such non-cash item to the extent that it
represents an accrual of or reserve for cash expenditures in any future period),
minus (b) all non-cash items increasing Consolidated Net Income for such period
(other than any such non-cash item to the extent that it will result in the
receipt of cash payments in any future period). Notwithstanding the foregoing,
the provision for taxes based on the income or profits of, and the depreciation
and amortization of, a Restricted Subsidiary shall be added to Consolidated Net
Income to compute EBITDA only to the extent (and in the same proportion) that
the net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted at
the date of determination to be dividended to LTV by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Restricted
Subsidiary or its stockholders.
"Event of Default" has the meaning set forth under "Events of Default".
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Securitization Facilities" means the Receivables Credit Agreement
and the Inventory Facility.
"Fair Market Value" means, with respect to any Property, the price (or, in
the case of a lease, the rent) which could be negotiated in an arm's-length free
market transaction, for cash, between a willing seller (or lessor) and a willing
buyer (or lessee), neither of whom is under undue pressure or compulsion to
complete the transaction. Fair Market Value will be determined, except as
otherwise provided, (a) if such Property has a Fair Market Value equal to or
less than $25 million, by any Officer of LTV or (b) if such Property has a Fair
Market Value in excess of $25 million, by a majority of the Board of Directors
and evidenced by a Board Resolution, dated within 30 days of the relevant
transaction, delivered to the Trustee.
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"GAAP" means United States generally accepted accounting principles as in
effect on the Issue Date, including those set forth (a) in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants, (b) in the statements and pronouncements of the
Financial Accounting Standards Board, (c) in such other statements by such other
entity as approved by a significant segment of the accounting profession and (d)
the rules and regulations of the Commission governing the inclusion of financial
statements (including pro forma financial statements) in periodic reports
required to be filed pursuant to Section 13 of the Exchange Act, including
opinions and pronouncements in staff accounting bulletins and similar written
statements from the accounting staff of the Commission.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Debt of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt of such other Person (whether arising by virtue of partnership
arrangements, or by agreements to keep-well, to purchase assets, goods,
securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person guaranteeing any obligation.
"Hedging Obligation" of any Person means any obligation of such Person
pursuant to any Interest Rate Agreement, Currency Exchange Protection Agreement,
Commodity Price Protection Agreement or any other similar agreement or
arrangement.
"Inactive Subsidiary" means, at any time, any Subsidiary of LTV that (a)
has assets with a total book value not in excess of $1 million, (b) has not
conducted any business or other operations during the prior 12 month period and
(c) is not an obligor with respect to any Debt.
"Incur" means, with respect to any Debt or other obligation of any Person,
to create, issue, incur (by merger, conversion, exchange or otherwise), extend,
assume, guarantee or become liable in respect of such Debt or other obligation
or the recording, as required pursuant to GAAP or otherwise, of any such Debt or
obligation on the balance sheet of such Person (and "Incurrence" and "Incurred"
shall have meanings correlative to the foregoing); provided, however, that a
change in GAAP that results in an obligation of such Person that exists at such
time, and is not theretofore classified as Debt, becoming Debt shall not be
deemed an Incurrence of such Debt; provided further, however,that solely for
purposes of determining compliance with "Certain Covenants -- Limitation on Debt
and Restricted Subsidiary Preferred Stock", amortization of debt discount shall
not be deemed to be the Incurrence of Debt, provided that in the case of Debt
sold at a discount, the amount of such Debt Incurred shall at all times be the
aggregate principal amount at Stated Maturity.
"Independent Appraiser" means an investment banking firm of national
standing or any third party appraiser of national standing, provided that such
firm or appraiser is not an Affiliate of LTV.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect against fluctuations in interest rates.
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"Inventory Facility" means the Note Purchase and Letter of Credit Agreement
dated as of February 26, 1998 among LTV Steel, as a party and as agent on behalf
of certain affiliates, the financial institutions party thereto, Chase
Securities Inc., as Placement Agent and The Chase Manhattan Bank, as Agent and
Collateral Agent, as amended from time to time.
"Investment" by any Person means any direct or indirect loan (other than
advances to customers in the ordinary course of business that are recorded as
accounts receivable on the balance sheet of such Person), advance or other
extension of credit or capital contribution (by means of transfers of cash or
other Property to others or payments for Property or services for the account or
use of others, or otherwise) to, or Incurrence of a guarantee of any obligation
of, or purchase or acquisition of Capital Stock, bonds, notes, debentures or
other securities or evidence of Debt issued by, any other Person. In determining
the amount of any Investment made by transfer of any Property other than cash,
such Property shall be valued at its Fair Market Value at the time of such
Investment.
"Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) by Moody's and BBB- (or the equivalent) by S&P.
"Investment Grade Status" shall be deemed to have been reached on the date
that the notes have an Investment Grade Rating from both Rating Agencies.
"Issue Date" means the date on which the old notes were initially issued.
"Issue Date of LTV's 8.20% Senior Notes due 2007" means September 17, 1997,
the date LTV originally issued its existing 8.20% Senior Notes due 2007.
"Letter of Credit" means an irrevocable documentary letter of credit from
an issuing bank of nationally recognized standing (whose senior unsecured debt
is rated "A" or higher according to the Rating Agencies at the time of issuance)
expiring on a date not earlier than May 31, 2000, which names the Escrow Agent
as the beneficiary thereof and which shall be presentable for payment at any
time by the Escrow Agent, provided that the only condition to payment thereunder
shall be a certification signed by the Escrow Agent stating one of the
following: (i) the Escrow Agent will use the amount drawn to fund a portion of
the aggregate Mandatory Redemption Price or (ii) in the case of any presentation
on or after January 31, 2000, the Special Mandatory Redemption has not taken
place.
"Lien" means, with respect to any Property of any Person, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such Property (including any Capital Lease
Obligation, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing or any Sale and
Leaseback Transaction, but excluding any operating lease (except Sale and
Leaseback Transactions) entered into in the ordinary course of such Person's
business).
"Limited Recourse Guarantee" means (i) any pledge of the Capital Stock of
an Unrestricted Subsidiary securing Debt of such Unrestricted Subsidiary that is
non-recourse in all respects to LTV and its Restricted Subsidiaries except with
respect to foreclosure on any Capital Stock of such Unrestricted Subsidiary held
by LTV or any Restricted Subsidiary and (ii) any guarantee by a Venture Holding
Company of Debt of a Person, other than a Restricted Subsidiary, in which such
Venture Holding Company holds an Investment,
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including through a pledge of such Investment, which guarantee is non-recourse
in all respects to LTV and its other Restricted Subsidiaries.
"Liquid Securities" means securities (i) of an issuer organized under the
laws of the United States or any State thereof or the laws of any member nation
of the European Union in each case that is not an Affiliate of LTV, (ii) that
are publicly traded on the New York Stock Exchange, the American Stock Exchange,
the Nasdaq National Market, the London Stock Exchange, the Bourse de Paris or
the Frankfurt Stock Exchange and (iii) as to which LTV is not subject to any
restrictions on sale or transfer (including any volume restrictions under Rule
144 under the Securities Act or any other restrictions imposed by the Securities
Act) or as to which a registration statement under the Securities Act covering
the resale thereof is in effect for as long as the securities are held,
provided, that securities meeting the requirements of clauses (i), (ii) and
(iii) above shall be treated as Liquid Securities from the date of receipt
thereof until and only until the earlier of (x) the date on which such
securities are sold or exchanged for cash or Cash Equivalent or (y) 90 days
following the date of receipt of such securities. In the event such securities
are not sold or exchanged for cash or Cash Equivalents within 90 days of receipt
thereof, for purposes of determining whether the transaction pursuant to which
LTV or a Restricted Subsidiary received the securities was in compliance with
the covenant described under "Certain Covenants -- Limitation on Asset Sales",
such securities shall be deemed not to have been Liquid Securities at any time.
"Moody's" means Moody's Investors Service, Inc. or any successor to the
rating agency business thereof.
"Net Available Cash" from any Asset Sale means cash payments received
therefrom (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Debt or other obligations relating to the
Property that is the subject of such Asset Sale or received in any other
non-cash form), in each case net of (a) all legal, title and recording tax
expenses, commissions and other fees and expenses incurred, and all Federal,
state, provincial, foreign and local taxes required to be accrued as a liability
under GAAP, as a consequence of such Asset Sale, (b) all payments made on any
Debt which is secured by any Property subject to such Asset Sale, in accordance
with the terms of any Lien upon or other security agreements of any kind with
respect to such Property, or which must by its terms, or in order to obtain a
necessary consent to such Asset Sale, or by applicable law, be repaid out of the
proceeds from such Asset Sale, (c) all distributions and other payments required
to be made to minority interest Holders in Subsidiaries or joint ventures as a
result of such Asset Sale and (d) the deduction of appropriate amounts provided
by the seller as a reserve, in accordance with GAAP, against any liabilities
associated with the Property disposed in such Asset Sale and retained by LTV or
any Restricted Subsidiary after such Asset Sale.
"Net Cash Proceeds" means, with respect to any issuance or sale of Capital
Stock, the cash proceeds of such issuance or sale, net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"New Bank Financing" means the credit agreement dated on or about the Issue
Date among LTV, the subsidiary guarantors party thereto, the lenders party
thereto, Credit Suisse First Boston, as administrative agent, and Morgan Stanley
Senior Funding, Inc., as syndication agent, together with any related documents
(including any security documents
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and guarantee agreements), as any of the foregoing may be amended, supplemented
or otherwise modified from time to time.
"Obligations" means the obligation of each Subsidiary Guarantor pursuant to
its Subsidiary Guaranty of (a) the full and punctual payment of principal and
interest on the notes when due, whether at maturity, by acceleration, by
redemption or otherwise, and all other monetary obligations of LTV under the
Indenture and the notes and (b) the full and punctual performance within
applicable grace periods of all other obligations of LTV under the Indenture and
the notes.
"Officer" means the President and Chief Executive Officer, the Chief
Financial Officer or any Vice President of LTV.
"Officers' Certificate" means a certificate signed by two Officers of LTV,
at least one of whom shall be the principal executive officer or principal
financial officer of LTV, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to LTV
or the Trustee.
"Permitted Liens" means:
(a) Liens to secure Debt permitted to be Incurred under clause (b) of
the second paragraph of the covenant described under "Certain
Covenants -- Limitation on Debt and Restricted Subsidiary Preferred Stock",
provided that any such Lien is limited to the accounts receivable and
inventory (and insurance proceeds and other Property similarly incidental
thereto) of LTV and the Restricted Subsidiaries and any securities issued
by a Securitization Subsidiary that purchases such accounts receivable or
inventory in connection with the Incurrence of such Debt;
(b) Liens on the assets of the Acquired Subsidiary Guarantors to
secure Debt permitted to be Incurred under the New Bank Financing, provided
that the outstanding principal amount of the Debt secured by Liens
permitted by this clause (b) shall not exceed $225 million;
(c) Liens to secure Debt permitted to be Incurred under clause (c) of
the second paragraph of the covenant described under "Certain
Covenants -- Limitation on Debt and Restricted Subsidiary Preferred Stock",
provided that any such Lien may not extend to any Property of LTV or any
Restricted Subsidiary other than (i) the Property purchased, acquired,
constructed or leased with the proceeds of such Debt, (ii) all improvements
and accessions to such Property and (iii) in the case of personal Property,
any real Property underlying such personal Property;
(d) Liens for taxes, assessments or governmental charges or levies on
the Property of LTV or any Restricted Subsidiary if the same shall not at
the time be delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision that shall be required in conformity with GAAP shall
have been made therefor;
(e) Liens imposed by law, such as carriers', warehousemen's and
mechanics' Liens on the Property of LTV or any Restricted Subsidiary
arising in the ordinary course of business and securing payment of
obligations which are not more than 60 days past due or are being contested
in good faith and by appropriate proceedings;
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(f) Liens on the Property of LTV or any Restricted Subsidiary Incurred
in the ordinary course of business to secure performance of obligations
with respect to statutory or regulatory requirements, performance or
return-of-money bonds, surety bonds or other obligations of a like nature
and Incurred in a manner consistent with industry practice, in each case
which are not Incurred in connection with the borrowing of money, the
obtaining of advances or credit or the payment of the deferred purchase
price of Property and which do not in the aggregate impair in any material
respect the use of Property in the operation of the business of LTV and the
Restricted Subsidiaries taken as a whole;
(g) Liens on Property at the time LTV or any Restricted Subsidiary
acquired such Property, including any acquisition by means of a merger or
consolidation with or into LTV or any Restricted Subsidiary; provided,
however, that any such Lien may not extend to any other Property of LTV or
any Restricted Subsidiary; provided further, however, that such Liens shall
not have been Incurred in anticipation of or in connection with the
transaction or series of transactions pursuant to which such Property was
acquired by LTV or any Restricted Subsidiary;
(h) Liens on the Property of a Person at the time such Person becomes
a Restricted Subsidiary; provided, however, that any such Lien may not
extend to any other Property of LTV or any other Restricted Subsidiary
which is not a direct Subsidiary of such Person; provided further, however,
that any such Lien was not Incurred in anticipation of or in connection
with the transaction or series of transactions pursuant to which such
Person became a Restricted Subsidiary;
(i) pledges or deposits by LTV or any Restricted Subsidiary under
workmen's compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders,
contracts (other than for the payment of Debt) or leases to which LTV or
any Restricted Subsidiary is party, or deposits to secure public or
statutory obligations of LTV, or deposits for the payment of rent, in each
case Incurred in the ordinary course of business;
(j) utility easements, building restrictions and such other
encumbrances or charges against real Property as are of a nature generally
existing with respect to properties of a similar character;
(k) Liens to secure industrial revenue or pollution control bonds
issued by LTV, provided that (i) the aggregate principal amount outstanding
of the Debt secured by Liens permitted by this clause (k) shall not at any
time exceed the higher of the cost or the Fair Market Value of the Property
financed by such Debt (together with improvements and accessions to such
Property) and (ii) such Liens shall not extend to any other Property of LTV
or any Restricted Subsidiaries;
(l) Liens arising out of judgments or decrees which involve uninsured
amounts not exceeding $20 million and which are being contested in good
faith by appropriate proceedings promptly instituted and diligently
concluded, provided that any reserve or other appropriate provision that
shall be required in conformity with GAAP shall have been made therefor;
(m) Liens securing or constituting a Limited Recourse Guarantee;
(n) Liens existing on the Issue Date not otherwise described in
clauses (a) through (m) above, including the Lien securing the USWA Secured
Obligations, provided that
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such Lien may be extended from time to time to Property of LTV or any
Restricted Subsidiary not subject thereto on the Issue Date to the extent
any such extension is required by the terms of the Collateral Trust
Agreement as in effect on the Issue Date;
(o) Liens on the Property of LTV or any Restricted Subsidiary to
secure any Refinancing, in whole or in part, of any Debt secured by Liens
referred to in clause (a), (b), (c), (g), (h), (k), (n), (q) or (r) of this
definition; provided, however, that any such Lien shall be limited to all
or part of the same Property that secured the original Lien (together with
improvements and accessions to such Property) and the aggregate principal
amount of Debt that is secured by such Lien shall not be increased to an
amount greater than the sum of (i) the outstanding principal amount, or, if
greater, the committed amount, of the Debt secured by Liens described under
clause (a), (b), (c), (g), (h), (k), (n), (q) or (r) of this definition, as
the case may be, at the time the original Lien became a Permitted Lien
under the Indenture and (ii) an amount necessary to pay any premiums, fees
and other expenses incurred by LTV or such Restricted Subsidiary in
connection with such Refinancing;
(p) Liens to secure Debt permitted to be Incurred under clause (l) of
the second paragraph of the covenant described under "Certain
Covenants -- Limitation on Debt and Restricted Subsidiary Preferred Stock",
provided that any such Lien shall be limited to the Property (together with
improvements and accessions to such Property) subject to the applicable
Sale and Leaseback Transaction;
(q) Liens to secure Debt permitted to be Incurred under clause (m)
(ii) of the second paragraph of the covenant described under "Certain
Covenants -- Limitation on Debt and Restricted Subsidiary Preferred Stock",
provided that any such Lien shall be limited to the Property (together with
improvements and accessions to such Property) subject to the applicable
Sale and Leaseback Transaction; and
(r) Liens securing Debt not otherwise described in clauses (a) through
(q) above, provided that at the time any such Lien is Incurred the sum of
(i) the aggregate principal amount (in the case of Debt sold at a discount,
at Stated Maturity) of all Secured Debt outstanding at such time (other
than the USWA Secured Obligations and any Permitted Refinancing Debt in
respect thereof to the extent not exceeding $250 million in the aggregate
and any Limited Recourse Guarantee) and (ii) the aggregate amount of
Attributable Debt outstanding at such time with respect to Sale and
Leaseback Transactions entered into by LTV or any Restricted Subsidiary,
does not exceed 10% of Consolidated Net Tangible Assets, as determined
based on the consolidated balance sheet of LTV as of the end of the most
recent fiscal quarter, after giving pro forma effect to the transactions
giving rise to the need for such calculation.
"Permitted Refinancing Debt" means any Debt that Refinances any other Debt,
including any successive Refinancings, so long as (a) such Debt is in an
aggregate principal amount (or if Incurred with original issue discount, an
aggregate issue price) not in excess of the sum of (i) the aggregate principal
amount (or if Incurred with original issue discount, the aggregate accreted
value) then outstanding of the Debt being Refinanced and (ii) an amount
necessary to pay any fees and expenses, including premiums and defeasance costs,
related to such Refinancing, (b) the Average Life of such Debt is equal to or
greater than the Average Life of the Debt being Refinanced, (c) the Stated
Maturity of such Debt is no earlier than the earlier of (i) the Stated Maturity
of the Debt being Refinanced and (ii) the date that is at least one year and one
day after the Stated Maturity of the notes and (d) the new Debt shall not be
senior in right of payment to the Debt that is being Refinanced; provided,
however, that
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Permitted Refinancing Debt shall not include (a) Debt of a Subsidiary that
Refinances Debt of LTV or (b) Debt of LTV or a Restricted Subsidiary that
Refinances Debt of an Unrestricted Subsidiary.
"Person" means any individual, corporation, company (including any limited
liability or joint-stock company), partnership, joint venture, association,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the Holder thereof to a preference with respect to the payment of
dividends, or as to the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such Person, over shares of any other class of
Capital Stock issued by such Person.
"Property" means, with respect to any Person, any interest of such Person
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, including Capital Stock in, and other securities of, any other
Person. For purposes of any calculation required pursuant to the Indenture, the
value of any Property shall be its Fair Market Value.
"pro forma" means, with respect to any calculation made or required to be
made pursuant to the terms hereof, a calculation performed in accordance with
Article 11 of Regulation S-X promulgated under the Securities Act, as
interpreted in good faith by the Board of Directors after consultation with the
independent certified public accountants of LTV, or otherwise a calculation made
in good faith by the Board of Directors after consultation with the independent
certified public accountants of LTV, as the case may be.
"Public Equity Offering" means an underwritten public offering of common
stock of LTV pursuant to an effective registration statement under the
Securities Act.
"Rating Agencies" mean Moody's and S&P.
"Receivables Credit Agreement" means the agreement dated as of October 12,
1994 among LTV Sales Finance Company, the lenders party thereto and Bankers
Trust Company, as collateral agent and facility agent, as amended from time to
time.
"Redeemable Dividend" means, for any dividend with respect to Redeemable
Stock, the quotient of the dividend divided by the difference between one and
the maximum statutory federal income tax rate (expressed as a decimal number
between 1 and 0) then applicable to the issuer of such Redeemable Stock.
"Redeemable Stock" means, with respect to any Person, any Capital Stock
that by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or otherwise (a) matures or is mandatorily
redeemable pursuant to a sinking fund obligation or otherwise, (b) is or may
become redeemable or repurchaseable at the option of the holder thereof, in
whole or in part, or (c) is convertible or exchangeable for Debt or Disqualified
Stock.
"Refinance" means, in respect of any Debt, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to issue other Debt, in
exchange or replacement for, such Debt. "Refinanced" and "Refinancing" shall
have correlative meanings.
"Restricted Payment" means (a) any dividend or distribution (whether made
in cash, securities or other Property) declared or paid on or with respect to
any shares of Capital Stock of LTV or any Restricted Subsidiary (including any
payment in connection with any merger or consolidation with or into LTV or any
Restricted Subsidiary), except for any
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dividend or distribution which is made solely to LTV or a Restricted Subsidiary
(and, if such Restricted Subsidiary is not a Wholly Owned Subsidiary, to the
other shareholders of such Restricted Subsidiary on a pro rata basis) or any
dividend or distribution payable solely in shares of Capital Stock (other than
Redeemable Stock) of LTV; (b) any payment made by LTV or any Restricted
Subsidiary to purchase, redeem, repurchase, acquire or retire for value any
Capital Stock of LTV or any Affiliate of LTV (other than a Restricted
Subsidiary) or (c) any payment made by LTV or any Restricted Subsidiary to
purchase, redeem, repurchase, defease or otherwise acquire or retire for value,
prior to any scheduled maturity, scheduled sinking fund or mandatory redemption
payment, any Subordinated Obligation (other than the purchase, repurchase, or
other acquisition of any Subordinated Obligation purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of acquisition).
"Restricted Subsidiary" means any Subsidiary of LTV other than an
Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Service or any successor to the
rating agency business thereof.
"Sale and Leaseback Transaction" means any arrangement relating to Property
now owned or hereafter acquired whereby LTV or a Restricted Subsidiary transfers
such Property to another Person and LTV or a Restricted Subsidiary leases it
from such Person, other than any such arrangement with respect to Property
acquired or placed into service by LTV or any Restricted Subsidiary after the
Issue Date to the extent entered into within 365 days after the date of such
acquisition or placement into service and not constituting a Capital Lease
Obligation.
"Secured Debt" means any Debt of LTV or any Restricted Subsidiary secured
by a Lien.
"Securitization Subsidiary" means any bankruptcy-remote special-purpose
Subsidiary of LTV or any Restricted Subsidiary established for the purpose of
arranging financing of accounts receivable and inventory, including by selling
or selling interests in such accounts receivable and inventory and related
Property or through borrowing money or obtaining credit secured by such
Property, and including LTV Sales Finance Company, a Delaware corporation, and
LTV Steel Products, L.L.C., a Delaware limited liability corporation.
"Senior Debt" of LTV means (a) all obligations consisting of the principal,
premium, if any, and accrued and unpaid interest in respect of (i) Debt of LTV
for borrowed money and (ii) Debt of LTV evidenced by notes, debentures, bonds or
other similar instruments permitted under the Indenture for the payment of which
LTV is responsible or liable; (b) all Capital Expenditure Debt of LTV; (c) all
obligations of LTV (i) for the reimbursement of any obligor on any letter of
credit, bankers' acceptance or similar credit transaction or (ii) under Hedging
Obligations; and (d) all obligations of other Persons of the type referred to in
clauses (a) and (b) for the payment of which LTV is responsible or liable as
Guarantor; provided, however, that Senior Debt of LTV shall not include (A) Debt
of LTV that is by its terms subordinate in right of payment to the notes; (B)
any Debt Incurred in violation of the provisions of the Indenture; (C) accounts
payable or any other obligations of LTV to trade creditors created or assumed by
LTV in the ordinary course of business in connection with the obtaining of
materials or services (including guarantees thereof or instruments evidencing
such liabilities); (D) any liability for Federal, state, local or other taxes
owed or owing by LTV; (E) any obligation of LTV to any Subsidiary; or (F) any
obligations with respect to any
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Capital Stock. "Senior Debt" of any Subsidiary Guarantor has a correlative
meaning, provided that clause (E) above shall be deemed to refer to any
obligations of such Subsidiary Guarantor to LTV or any Subsidiary of LTV.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of LTV within the meaning of Rule 1-02 under Regulation
S-X promulgated by the Commission.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred and, in the case of the notes, excluding the Special Mandatory
Redemption provisions).
"Subordinated Obligation" means any Debt of LTV or any Subsidiary Guarantor
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the notes or the applicable
Subsidiary Guaranty pursuant to a written agreement to that effect.
"Subsidiary" means, in respect of any specified Person, any corporation,
company, partnership, joint venture, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock or
other interests (including partnership interests) entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of
such Person or (iii) one or more Subsidiaries of such Person.
"Subsidiary Guarantor" means each Domestic Wholly Owned Subsidiary (other
than any Securitization Subsidiary or Inactive Subsidiary) and any other Person
that becomes a Subsidiary Guarantor pursuant to the covenant described under
"Certain Covenants -- Future Subsidiary Guarantors".
"Subsidiary Guaranty" means, (a) with respect to each Subsidiary Guarantor
that is not an Acquired Subsidiary Guarantor, the senior unsecured guarantee of
the Obligations by such Subsidiary Guarantor and (b) with respect to each
Acquired Subsidiary Guarantor, the senior subordinated guarantee of the
Obligations by such Acquired Subsidiary Guarantor, in each case on the terms set
forth in the Indenture.
"Tubular Business" means the aggregate business as conducted on the Issue
Date (or, if the Copperweld Acquisition has not been completed as of the Issue
Date, the date immediately following the closing of the Copperweld Acquisition)
of Copperweld, Welded Tube and LTV Tubular, together with any other Subsidiaries
formed or acquired after the Issue Date primarily involved in the manufacture
and sale of tubular steel products.
"Unrestricted Subsidiary" means (a) any Subsidiary of an Unrestricted
Subsidiary; (b) any Subsidiary of LTV that is designated after the Issue Date as
an Unrestricted Subsidiary as permitted pursuant to the covenant described under
"Certain Covenants -- Designation of Restricted and Unrestricted Subsidiaries"
and not thereafter redesignated as a Restricted Subsidiary as permitted pursuant
thereto; and (c) Presque Isle Corporation, L-S Electro-Galvanizing Company,
LTV-Trico, Inc., Cayman Mineracao do Brasil Ltda and L.A.S. Resources, Inc.
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"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"USWA Secured Obligations" means the retiree health benefit, plan
contribution and other obligations of LTV and its Subsidiaries secured by a Lien
granted to the USWA pursuant to the Collateral Trust Agreement.
"Venture Holding Company" means (a) LTV Columbus Processing, Inc., LTV EGL
Holding Company, Dearborn Leasing, Inc., Alcite I, Inc., LTV Blanking
Corporation, LTV Steel de Mexico, Ltd. and LTV Walbridge Inc. and (b) any other
Subsidiary of LTV formed or acquired after the Issue Date whose activities are
limited to making and owning equity interests and other Investments in one or
more joint ventures and activities incidental thereto, including participation
in financing arrangements of such joint ventures (but in each case only for so
long as its activities are so limited), provided that (i) in the case of clauses
(a) and (b), the equity interests in any such joint venture are owned by at
least one other Person (other than LTV or any Affiliate of LTV) and (ii) in the
case of clause (b), the applicable assets are acquired by such Subsidiary in
connection with the formation of such joint venture.
"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof.
"Wholly Owned Subsidiary" means, at any time, a Restricted Subsidiary all
the Voting Stock of which (except directors qualifying shares) is at such time
owned, directly or indirectly, by LTV and its other Wholly Owned Subsidiaries.
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MATERIAL UNITED STATES TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of old notes for new notes in the exchange offer will not
result in any United States federal income tax consequences to holders. When a
holder exchanges an old note for a new note in the exchange offer, the holder
will have the same adjusted basis and holding period in the new note as in the
old note immediately before the exchange.
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of new notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of new notes received in exchange for old notes where old notes
were acquired as a result of market-making activities or other trading
activities. We have agreed that, for a period of 90 days after the expiration
date, we will make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any resale of new notes received by it
in exchange for old notes.
We will not receive any proceeds from any sale of new notes by
broker-dealers.
New notes received by broker-dealers for their own account in the exchange
offer may be sold from time to time in one or more transactions
- in the over-the-counter market
- in negotiated transactions
- through the writing of options on the new notes or
- a combination of those methods of resale
at market prices prevailing at the time of resale, at prices related to
prevailing market prices or negotiated prices.
Any resale may be made
- directly to purchasers or
- to or through brokers or dealers who may receive compensation in the form
of commissions or concessions from any broker-dealer or the purchasers of
any new notes.
Any broker-dealer that resells new notes that were received by it for its
own account in the exchange offer and any broker or dealer that participates in
a distribution of those new notes may be considered to be an "underwriter"
within the meaning of the Securities Act. Any profit on any resale of those new
notes and any commission or concessions received by any of those persons may be
considered to be underwriting compensation under the Securities Act. The letter
of transmittal states that, by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be considered to admit that it
is an "underwriter" within the meaning of the Securities Act.
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LEGAL MATTERS
The validity of the new notes issued in this exchange offer will be passed
upon for us by Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York
10017.
EXPERTS
The consolidated financial statements of The LTV Corporation, and the
financial statements of Trico Steel Company, L.L.C. as of December 31, 1999 and
1998 and for each of the three years in the period ended December 31, 1999, the
combined financial statements of Copperweld Corporation and Copperweld Canada
Inc. as of December 31, 1998 and 1997 and for each of the three years in the
period ended December 31, 1998, and the financial statements of Welded Tube Co.
of America as of June 30, 1999 and for the period from January 1, 1999 to June
30, 1999 and the period from July 1, 1998 to December 31, 1998, appearing in The
LTV Corporation's Annual Report (Form 10-K) for the year ended December 31,
1999, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their reports thereon included therein and incorporated herein by reference.
Such financial statements are incorporated herein by reference in reliance upon
such report given on the authority of such firm as experts in accounting and
auditing.
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT
WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN
ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS OF
ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Summary...................... 2
Risk Factors............................ 9
Where You Can Find More Information..... 18
Forward-Looking Statements.............. 19
Use of Proceeds......................... 20
Unaudited Pro Forma Condensed Combined
Statement of Operations............... 21
Selected Combined Financial Information
and Certain Operating Data of
Copperweld............................ 23
The Exchange Offer...................... 25
Description of Notes.................... 34
Material United States Tax Consequences
of the Exchange Offer................. 79
Plan of Distribution.................... 79
Legal Matters........................... 80
Experts................................. 80
</TABLE>
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$275,000,000
11 3/4% Senior Exchange Notes
due 2009
The LTV Corporation
[LTV LOGO]
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PROSPECTUS
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March 30, 2000
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