Indian group to buy Bethlehem bar unit

November 24, 1992|By Ross Hetrick | Ross Hetrick,Staff Writer

Bethlehem Steel Corp. yesterday announced that it has signed a letter of intent to sell its bar, rod and wire division to Ispat Mexicana S.A. de C.V., part of the Ispat Group of Calcutta, India.

The price of the proposed sale was not disclosed.

The deal includes the rod mill at the Sparrows Point in Baltimore County, which had a work force of 350 before it was shut down Aug. 14. The division also includes steel mills in Johnstown, Pa., and a 13-inch bar mill in Lackawanna, N.Y. The largest operation in the division is the Johnstown operation, which employed 1,950.

Bethlehem officials said they did not know what Ispat planned to do with the Sparrows Point operation.

Bethlehem said in a press release that Ispat planned to modernize parts of the division and make it "a world-class steelmaker, both in quality and in cost on a sustainable basis."

At a news conference in Johnstown, Ispat officials said they planned to reactivate the division and to employ 1,500 workers at theJohnstown operation. Ispat officials have said previously that they would be investing $100 million in the Johnstown operation.

There was no mention at yesterday's press conference of how many workers might work at the Sparrows Point and Lackawanna operations. The Ispat officials said they planned to negotiate a labor agreement with the United Steelworkers of America.

Local officials of the union were not available for comment.

Mark L. Wasserman, secretary of the state's Department of Economicand Employment Development, said state officials have not had any contact with Ispat officials to determine the company's plans.

"Assuming they are going to resume operations here, it is a very strong reminder of how rapidly our world is changing," he said.

Mr. Wasserman said his department will be trying to contact Ispat as soon as possible to see that operations at the rod mill resume "as quickly as possible."

Bethlehem said there remains "a considerable amount of work," before a definitive agreement was reached with Ispat.

Separately, Bethlehem's debentures and revenue bonds were downgraded by Moody's Investors Service Inc. yesterday to single-B1 from Ba3and its convertible preferred stock dropped to single-B3 from single B2. About $500 million in securities were involved.

The rating service downgraded the securities because of Bethlehem's reduced financial strength and flexibility as a result of the long and severe steel recession. There was also concern that a recovery by the steel industry might be delayed and relatively weak, Moody's said.

Ispat, owned by the Mittal family of Calcutta, has been aggressively expanding its holdings in the Western Hemisphere in recent years. In 1988, the company signed a 10-year lease of the state-owned iron and steel company on the Caribbean islands of Trinidad and Tobago.

Then, last November, Ispat bought the government-owned Balsa Steel company in Mexico in a deal involving $25 million in cash and $195 million in debt. The Indian government agreed to spend $50 million to improve the Mexican plant.

The bar, rod and wire division here would be owned by Ispat Mexicana S.A. de C.V., part of the Ispat operation that is headquartered in Jakarta, Indonesia.

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