2 more bids possible in sale of Beth Steel

Firms express interest in delaying deadline

Potential rivals to ISG offer

April 15, 2003|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

Two companies expressed an interest yesterday in challenging International Steel Group Inc.'s $1.5 billion bid for Bethlehem Steel Corp., a spokeswoman for the steelmaker said.

North Point Industries LLC of Edgemere filed a letter in U.S. Bankruptcy Court in Manhattan outlining a bid that would surpass ISG's offer by $300 million, said Bethlehem spokeswoman Bette Kovach. In addition to North Point, another privately held company expressed interest yesterday in extending the bidding, Kovach said.

She was unable to identify that company or say whether it had filed a letter asking the bankruptcy court for a deadline extension.

Yesterday was the court's deadline for competing bids in an auction of Bethlehem's assets scheduled for tomorrow. If the court receives no other valid bids, the sale to ISG will go through without an auction.

F. Ridgely Todd Jr., co-founder of North Point, which was formed to buy Bethlehem and redevelop the North Point industrial area, said its "proposal is not fully done; that's why we asked for more time for this."

Todd said North Point has organized a management team to run Bethlehem if its bid is successful, including the installment of Roger P. Penny - a past president, chief operating officer and vice chairman of Bethlehem - as North Point's president.

Kovach confirmed that North Point had expressed an interest in Bethlehem's assets.

"There has been a proposal made to the court to delay the auction process so that an interested party can submit a bid to Bethlehem's bankruptcy attorneys," Kovach said.

She said a court-ordered auction scheduled for tomorrow could be delayed by the judge. She said Bethlehem has seen only North Point's letter requesting an extension for bids until May 14.

In North Point's letter, Todd wrote that his company has "more than $3 billion in U.S. Treasury instruments available to finance the acquisition, to improve dividends to secured and unsecured creditors, to repair retiree pension and health plans, and to meet working capital needs."

It also referred to Serendipity International Foundation of California as offering financial support. An official at Serendipity did not return a phone call seeking comment.

Thomas Mayer, an attorney representing Bethlehem's creditors' committee, said North Point still must provide "serious evidence" that it has access to $3 billion.

"We would love to see someone come in and compete [for Bethlehem], but we would need to see that these people have the financial wherewithal" to buy the company, Mayer said.

Todd declined further comment on the company's financing arrangements.

North Point would need to reach a labor agreement with the Steelworkers union unless it wanted to sign the previous agreement, said Tom Conway, a top union negotiator. "If that's what they want to do, we'll be easy to do business with," he said.

Todd said North Point would offer the same agreement that ISG offered the union or a better one.

It remained unclear yesterday whether North Point or the other potential bidder will emerge as a significant competitor to ISG's bid and create a situation like that of U.S. Steel Corp. and AK Steel Corp., which are both vying for National Steel Corp., an Indiana steelmaker in bankruptcy.

On March 12, Bethlehem reached an agreement to sell virtually all its assets, including its Sparrows Point plant in Baltimore County, for nearly $1 billion in cash and $500 million in assumed liabilities to ISG. Bethlehem has operated under Chapter 11 bankruptcy protection since October 2001.

Under court-ordered guidelines, competing bidders had until yesterday to put up a $10 million deposit, bid at least $15 million more than ISG's offer for Bethlehem and provide up to $32 million in break-up fees and other out-of-pocket expenses as reimbursement to ISG if its bid loses.

The federal Pension Benefit Guaranty Corp., one of Bethlehem's largest creditors, filed a court objection yesterday to ISG's offer. The agency objected to Bethlehem's inclusion of 31 "business entities" that are not part of the company's bankruptcy estate in the proposed sale to ISG.

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