- The Washington Times - Tuesday, January 7, 2003

PHILADELPHIA (AP) International Steel Group offered to buy Bethlehem Steel's steel mills and related assets yesterday and bring the once-mighty industrial giant out of bankruptcy.
ISG valued the offer at $1.5 billion and said it expects negotiations for the purchase to be completed within 10 days. The offer would then have to be approved by the Bethlehem Steel board, which will consider it later in January, and the U.S. Bankruptcy Court.
Robert S. Miller Jr., Bethlehem Steel's chairman and chief executive officer, said it could take several weeks to review the proposal, but hoped for an agreement.
"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," Mr. Miller said.
Neither ISG nor Bethlehem Steel officials would immediately comment on whether job cuts would be necessary at the Bethlehem plants.
"We are committed to completing this transition while meeting the highest expectations of the customers who rely on the steel produced in the facilities we intend to purchase," said Rodney B. Mott, president and chief executive officer of ISG.
Bethlehem Steel filed for bankruptcy protection Oct. 15, 2001. The company has been negotiating with potential buyers or joint-venture partners as well as attempting to reorganize the business to continue as a stand-alone operation.
Bethlehem Steel was a giant of 20th century industry, once employing nearly 300,000 people to forge steel for skyscrapers and bridges and build ships for World War II. But its plant sprawling 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 and its Sparrows Point Division near Baltimore, with smaller operations in Coatesville and Conshohocken, Pa. Its corporate headquarters remain in Bethlehem.
Mr. Miller has previously said there was "zero chance" Bethlehem Steel would go out of business. But merger negotiations had stumbled over huge obligations to 75,000 pensioners, including retirees and surviving spouses, and 130,000 health-care-plan participants, including employees, retirees and their families. Potential investors or partners have balked at talking on those "legacy costs," which Mr. Miller has estimated at $5 billion.
ISG officials had to recalculate their offer after a federal agency proposed Dec. 17 to terminate the Bethlehem Steel pension plan and take over responsibility for benefits earned to date.
Under the takeover by the U.S. Pension Benefit Guaranty Corp., retirees would continue receiving monthly checks and others who have earned eligibility for pensions would receive benefits on reaching retirement age, but the agency wouldn't be responsible for future pensions.
That meant ISG couldn't count on the pension agency to help bear costs of any early retirements negotiated to trim the Bethlehem Steel work force. Mr. Mott wouldn't comment on the magnitude of potential job cuts. He said ISG was working on operations plans for each plant, but hadn't worked out staffing details.
Mr. Mott also wouldn't comment on how much of the $1.5 billion value of the offer consisted of assumed liabilities of Bethlehem. He said those would include some operating leases and contracts, current accounts payable and environmental obligations at the Bethlehem Steel plants.

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