Tuesday, January 7, 2003
The newly formed company that bought LTV mills is poised to become the largest U.S. steel producer.
PHILADELPHIA (AP) -- Bethlehem Steel Corp., a giant of 20th century industry that once employed nearly 300,000 people forging steel for skyscrapers and World War II ships, would be sold to International Steel Group under a deal that would create the country's largest steelmaker.
Cleveland-based ISG, formed by reviving the liquidated LTV Corp. last year, has proposed to buy the steel mills and related assets of the bankrupt steelmaker for cash and assumption of liabilities valued at $1.5 billion.
ISG said Monday it expected negotiations to be completed within 10 days.
Analysts predicted Bethlehem Steel's remaining work force would be cut by as much as 50 percent under the proposal. But United Steelworkers union officials said the acquisition would save many jobs that would be lost if Bethlehem shut down entirely.
The Bethlehem Steel board will consider the offer later in January. It also must be approved by U.S. Bankruptcy Court. Robert S. Miller Jr., Bethlehem Steel's chairman and chief executive officer, said he hoped for an agreement.
ISG would become the largest U.S. steel producer if it completes the Bethlehem acquisition.
"A combination of Bethlehem and ISG would create a formidable new competitive player in the steel industry, with 16 million tons of annual shipment capacity," Miller said.
Citing sources close to the negotiations, The Wall Street Journal reported that the deal was for $1 billion cash and $500 million for assumption of leases and contracts, current accounts payable and environmental obligations at Bethlehem Steel plants.
ISG officials said plant operations would continue seamlessly.
Chris Olin, an analyst with Midwest Research, said the acquisition would be a positive step in consolidation of the U.S. steel industry, creating a company that would command a significant portion of the U.S. market.
Since filing for bankruptcy protection on Oct. 15, 2001, Bethlehem Steel has negotiated with potential buyers or joint-venture partners as well as attempting to reorganize the business to continue as a stand-alone operation.
The company's sprawling plant along the Lehigh River in Bethlehem hasn't produced steel since 1995.
With about 12,000 employees remaining, the company makes steel at its Burns Harbor Division in northwest Indiana, its Sparrows Point Division near Baltimore, and smaller operations in Lackawanna, N.Y., and Coatesville and Conshohocken, Pa.
The new company would be based in Cleveland and the Bethlehem Steel headquarters building in Bethlehem would be sold, Miller said in a conference call.