Administration May 2, 2003

Bethlehem Steel – ISG Sale Deal Reached

February 5, 2003 (PLANSPONSOR.com) - Bethlehem Steel Corporation has hammered out an agreement in principle for International Steel Group (ISG) to acquire substantially all of Bethlehem's assets, Bethlehem announced.

Reported by

Fred Schneyer

The as-yet undisclosed terms of the sale would be considered in a special February 8 meeting of Bethlehem’s board. The agreement is also subject to the completion of an asset purchase agreement, the approval of the bankruptcy court having jurisdiction of Bethlehem’s Chapter 11 case, and the satisfaction of certain conditions to closing. Those conditions include required governmental approvals and other consents and the resolution of certain claims by the Pension Benefit Guaranty Corporation (PBGC). The PBGC announced it would take over Bethlehem’s pension plan despite the long-running talks between Bethlehem and ISG (See PBGC Puts a Wrench in Bethlehem, International Steel Merger).

“Following a thorough review of ISG’s proposal, Bethlehem’s executive management and its advisors believe that the acquisition by ISG will provide the best value achievable to Bethlehem and will also allow Bethlehem’s well-maintained facilities to remain in operation, thereby preserving thousands of jobs,” Robert Miller, Bethlehem’s chairman and chief executive officer said in a statement.

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Bethlehem’s assets include steelmaking facilities in Burns Harbor, Indiana; Sparrows Point, Maryland.; Steelton, Pennsylvania; and Coatesville, Pennsylvania; as well as finishing locations in New York, Pennsylvania and Ohio. In addition, Bethlehem participates in several joint ventures. Other assets include land on the sites of former Bethlehem operations in primarily New York and Pennsylvania.

The agreement, if approved by the board and the bankruptcy court, would be subject to a sale and auction process in the bankruptcy court. A closing would occur following sale approval by the court.

The sale of Bethlehem’s assets to ISG will create the largest steel company in North America with shipment capability of 16 million tons.

Unions and some politicians had been battling the PBGC takeover because workers would likely get substantially less from the agency than they would under the steelmaker’s own plan (See Bayh Calls for Delay in PBGC’s Bethlehem Steel Plan Takeover ).