Brown Gibbons Lang & Company (“BGL”) Raises $165 Million to Buy Selected Assets of The LTV Corporation

The U.S. steel industry is facing unprecedented financial and operational challenges. The level of consolidation necessary to remain a competitive force has been slow to occur, and the availability of capital necessary to support even moderate growth has been virtually nonexistent. Amidst these challenging circumstances, BGL identified and realized an opportunity. On February 27, 2002, BGL led a strong and competitive bid for the Cleveland Works assets of The LTV Corporation (LTV), formerly the nation’s second largest integrated steel producer. Under the unusually condensed timeframe of the bankruptcy proceedings, BGL assembled and orchestrated an impressive team of seasoned industry management, substantial committed capital, supportive state and community leaders and other professionals. However, tepid interest from other bidders in the non-Cleveland assets of LTV ultimately decided the auction in favor of a single bid for LTV in aggregate. To facilitate the bid and proposed buyout of the Cleveland Works assets of LTV, BGL demonstrated the following financial and strategic capabilities:

Raised $165 million of total committed capital in less than five weeks, including a working capital facility, a secured term-loan, debt and preferred investments from strategic partners and equity from leading equity sponsors;

Submitted, following extensive due diligence efforts, a competitive bid for Cleveland Works, including the assumption of environmental liabilities;

Assembled a management team including several of the most notable names in the US steel industry as well as strong operational management from the former LTV;

Prepared to exceed the stalking-horse bid for the Cleveland Works assets, though combination with weaker bids on non-Cleveland assets could not exceed the winning bid in aggregate;

Designed and discussed, through management, terms for a pioneering labor contract with the steel maker’s union to be proposed following a successful bid;

Convened a premiere working group of over 30 bankruptcy, industry, labor and accounting professionals including Thompson Hine, Hatch Beddows, Spieth Bell and Cohen & Company, each working on a contingency fee basis;and

Developed an extensive business plan and financial model for the operation and financing of the Cleveland Works assets in close partnership with management that was reviewed by industry consultants Hatch Beddows.

The underlying dynamics which BGL overcame in assembling a compelling proposal for the Cleveland Works of LTV are the primary factors which have brought the entire steel industry to a critical inflection point. Worldwide supply-and-demand dynamics have driven hot and cold roll prices to two-decade lows as recently as December. Bankruptcies of industry leaders have forced a complete restructuring and repositioning of the integrated steel industry. Recent and pending legislation from Washington, D.C. will help determine the future path of domestic steel manufacturing. Amidst the challenges presented by this confluence of factors, BGL found opportunity. Its ability to bring together a team so deep in capital, experience and commitment underscores BGL’s capabilities and understanding of the important dynamics driving the industry.