Bethlehem Steel Corp. said yesterday it has terminated negotiations with Peter G. Angelos to sell the BethShip Inc. Sparrows Point shipyard and will close the 107-year-old yard.
The closure will eliminate 900 jobs, leaving an undisclosed portion of the 100 current workers to complete the shutdown.
Bethlehem blamed the collapse of talks on "several complex and significant issues" but declined to elaborate.
"Bethlehem will proceed to permanently close the yard in an orderly manner and initiate a sale of the yard's assets," the company said in a statement.
Angelos said concerns about environmental liability for contamination at the site were among those too difficult to overcome. "Unfortunately, the two sides can't bridge the gap that remains," he said. "Both sides wanted to get it done. I don't like to admit defeat. But right now, this deal simply won't fly."
Union officials and Gov. Parris N. Glendening held out some hope that a deal can still be reached.
Murphy Thornton, president of Local Lodge S-33 of the Industrial Union of Marine and Shipbuilding Workers, said that since last year Bethlehem held talks with Angelos before meeting with WHX Corp. of New York, then again with Angelos.
"Because of the way things have happened, I'm holding out hope that there's still time for Peter to say, 'Yes,' " Thornton said.
Glendening said, "Despite today's announcement, I remain optimistic that an agreement can be reached that will be acceptable to all parties and will protect the jobs of the hundreds of Marylanders who depend on this historic Baltimore shipyard for their livelihood. I strongly urge both parties to resolve this current impasse as quickly as possible."
Angelos said he had spent seven months trying to reach a deal. "Spending an additional period of time is not something I'm opposed to," he said. "But I'm not optimistic."
Angelos would not say whether he is walking away from the deal altogether. "You want a yes or a no," he said. "You can't get a yes and you can't get a no because there isn't a yes or no."
The state was prepared to kick in an incentive package worth about $4.5 million, plus assume the cost of needed repairs on the yard's dry-dock, according to sources.
Ruth Podems, an EPA spokeswoman, said federal agencies, Angelos and Bethlehem had struck a deal that would have offered Angelos protection from past or existing environmental contamination. She also said Bethlehem Steel would have provided about $10.6 million for cleanup of environmental contamination.
Angelos, who had offered about $26 million for the yard, praised Glendening, Bethlehem, state and federal officials for working hard to achieve a deal.
But Angelos, an attorney who made millions in asbestos litigation, said he found EPA's proposal inadequate. "The environmental problems, I'm afraid, have not been completely solved," he said.
Seeking assurances that he would not be held liable for soil and ground water contamination at the site caused by Bethlehem, he wanted representation in a sitewide investigation of the property that is required by a separate consent decree between Bethlehem Steel and federal environmental officials.
Associates said Angelos was also concerned that the investigation would not be thorough enough, leaving him liable for contamination found later at the site. Additionally, Angelos was said to be worried that the investigation could take as long as 10 years, making it difficult to determine the identity of the polluter.
The yard stopped taking orders beyond the end of June, sending home all but about 100 of the 900 workers. The closure of the order book means the yard would have likely lost millions this year as it sought to get re-started.
Angelos had reached a swift agreement with workers at the yard, bringing jubilation to a situation that appeared hopeless to some. "I have people who bought houses since the shutdown because they thought Peter was going to be there," Thornton said.
Word of the collapse of the deal started spreading yesterday morning. U.S. Rep. Robert L. Ehrlich Jr., a Republican whose district includes Bethlehem Steel, said he called WHX Corp., a one-time prospective buyer, to see if the New York-based holding company for Wheeling-Pittsburgh Steel Co. was still interested. The company's response was yes, Ehrlich said.
"I am firmly convinced that the appropriate buyer can not only make a go at that place but make a lot of money," Ehrlich said. "Quite frankly, I don't care who the buyer is, as long as they're committed to that shipyard and those people."
Union officials said they would negotiate with WHX if the Angelos deal is truly dead. WHX officials did not return calls seeking comment.
Angelos said, "If they come back and the jobs are saved, that's fine with me."
Angelos first emerged as a potential buyer last October, when Bethlehem said it would close or sell the yard. He offered about $20.5 million.