Bethlehem Steel Receives Proposal From ISG.

Business Editors

BETHLEHEM, Pa.--(BUSINESS WIRE)--Jan. 6, 2003

Bethlehem Steel Corporation today received a proposal from International Steel Group (ISG) to acquire all of Bethlehem's steelmaking assets that, combined with ISG's assets, would create the largest steel company in North America.

Today marks the end of a 60-day period of exclusivity between the two companies. Bethlehem will review the proposal with its and ISG's advisers to determine if it is in the best interests of Bethlehem's creditors and other constituents. The review of the proposal could take several weeks.

"Receipt of a proposal from ISG is certainly a positive development, and I am hopeful that we can reach an agreement in the near future," said Robert S. Miller, Chairman and CEO of Bethlehem Steel. "A combination of Bethlehem and ISG would create a formidable new competitive player in the steel industry, with 16 million tons of annual shipment capacity. The transaction structure is designed to ensure a seamless continuity of operations for the benefit of employees, customers, suppliers and our communities."

The combination would be a major step toward the consolidation and rationalization of America's steel industry. "President Bush's courageous decision last March to grant the domestic steel industry temporary import relief has bought us the time to pursue this kind of restructuring," Mr. Miller commented.

The basic elements of ISG's recently concluded six-year labor agreement with the United Steelworkers of America (USWA) would apply to the Bethlehem plants. "ISG has established a working relationship that sets a new standard for productivity in the integrated steel industry," he said.

"While I enthusiastically endorse the concept of a business combination with ISG along the lines proposed, it is premature to comment on the specific terms of the proposal. I look forward to discussing it with ISG and with our creditors committee," Mr. Miller added.

Bethlehem has been making substantial progress on a standalone plan of reorganization, and will continue to pursue that alternative until a combination with ISG has been approved by Bethlehem's board of directors, its creditors committee and the bankruptcy court.

"For the past 15 months, we have been working to ensure that Bethlehem's facilities will be valued and enhanced. At the same time, we have tried to achieve the best outcome for Bethlehem's many constituencies. We continue to work with the USWA to provide some assistance, through a new labor agreement like the one reached with ISG and the union, for retiree health care. Based on the financial challenges that Bethlehem has faced, we believe this merger with ISG would be the best avenue toward achieving those goals," Mr. Miller said.

If the merger is realized, the new company would have fully integrated steelmaking operations in Cleveland, Ohio; Burns Harbor, Ind.; East Chicago, Ind., and Sparrows Point, Md. and electric furnaces in Coatesville and Steelton, Pa. Finishing facilities will be located in Ohio, New York, Pennsylvania and Indiana. The finishing facilities include those with the widest range of high-value coating lines of any North American steel company. In addition, ISG would succeed Bethlehem as the joint venture partner for Bethlehem's current interests in Illinois, Indiana, Mississippi and Florida.

A conference call for the media will be held today at 4 p.m. with Steve Miller, Bethlehem's CEO. To receive the dial-in number, please call 610-694-5605.