Other buyers hinted for Beth Steel, plants

European companies, those eyeing LTV included by analysts

March 01, 2002|By Kristine Henry | Kristine Henry,SUN STAFF

While Brazil's largest steel maker and Pittsburgh-based United States Steel Corp. have emerged as possible purchasers of Bethlehem Steel Corp.'s interests, they are not the only companies that could be looking to buy the company or its plants , industry analysts said yesterday.

Officials from the Brazilian firm, Companhia Siderurgica Nacionale (CSN), were in Baltimore this week touring the Sparrows Point plant and discussing its future under Brazilian ownership.

Bethlehem officials declined to comment on the visit, but a spokeswoman for the Pennsylvania steel maker said the company has been "pursuing a number of avenues that will lead to consolidation in the steel industry, and we have been speaking with a number of potentially interested parties for several of Bethlehem's facilities, including Sparrows Point."

The local plant is Baltimore County's largest private employer with 3,500 workers.

Speculation as to who else might be looking at Bethlehem's plants is wide-ranging, especially in light of the developing situation with LTV Corp. The Cleveland steel maker is in Chapter 11 and started liquidating its assets at the end of last year.

Investment firm W.L. Ross & Co. LLC won approval from a bankruptcy judge yesterday to acquire LTV's facilities for just under $400 million. The firm specializes in buying distressed companies.

"The logical assumption would be that the potential buyers of LTV would be the short universe of [Bethlehem] buyers," said steel analyst John Tumazos of Prudential Securities in New York.

LTV did not disclose what other companies had been bidding on its facilities, but they are widely believed to have included U.S. Steel, CSN, Canada's Dofasco Inc. and China's Baosteel Group.

Bethlehem already has a tentative agreement to be purchased by U.S. Steel, but that deal hinges on a government takeover of retiree health costs -- which could be up to $12 billion -- and high tariffs on imported steel. President Bush has said he will decide on the tariff issue by March 6.

A spokesman for U.S. Steel said yesterday that the company has no formal agreement, and there is nothing that precludes Bethlehem from pursuing other deals.

"It's not unexpected that a company that is looking for a sale or partners would be looking at all possibilities," said spokesman John Armstrong.

Steel analyst Donald Barnett of Economic Associates Inc. of McLean, Va., said he has heard that European steel makers -- possibly England's Corus or France's Usinor -- might be interested in Bethlehem.

"Everybody's been kicking around all the tires, looking at all the options," Barnett said.

However, the issue of retiree, or legacy, costs that has so far stymied a deal with U.S. Steel would be just as unpalatable to foreign interests, he said. "Take away the legacy costs," Barnett said, "and now we're interested."

Bethlehem filed for Chapter 11 bankruptcy protection on Oct. 15, listing $4.2 billion in assets and $6.75 billion in liabilities, including an unfunded health care obligation of nearly $3 billion and a pension fund that is short $1.85 billion.

It said in January that it had enough cash to continue operations through the end of the year.

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