Birmingham Steel Corporation Comments On Auditor's Opinion.

Business Editors

BIRMINGHAM, Ala.--(BUSINESS WIRE)--Oct. 17, 2001

Birmingham Steel Corporation (NYSE:BIR) today issued the following:

John Correnti, Chairman and Chief Executive Officer, commented, "On October 15, 2001, Birmingham Steel filed its Annual Report on Form 10-K with the Securities and Exchange Commission. The report of independent auditors that accompanied the financial statements in the Form 10-K contained an explanatory paragraph highlighting that the Company has significant debt principal payments due on April 1, 2002.

Correnti continued, "In the financial statements for the fiscal year ended June 30, 2001, $291 million of debt has been appropriately classified as a current liability, which means the debt matures within one year of the balance sheet date. Because the Company is not currently generating cash flow from its operations sufficient to pay the $291 million debt in full on April 1, 2002, and because we do not have a financing commitment in place to refinance the scheduled maturities in fiscal 2002, auditing standards required Ernst & Young to include the standard explanatory paragraph in their opinion. The explanatory paragraph essentially states that the Company's ability to continue as a going concern is dependent upon resolution of the debt issue."

Correnti stated, "For some time now, the Company's public statements have discussed the fact that our revolving credit facility and a portion of our senior secured notes are scheduled to mature on April 1, 2002. We have also indicated that we have been engaged in ongoing discussions with our lenders regarding a refinancing, restructuring or extension of our debt. Recent discussions with the lenders were disrupted by the tragedy of September 11, 2001. Because of the uncertainties in the economy and steel industry as a result of the tragic events, the Company believes it is appropriate to postpone taking action to address the debt until the sale of its Cleveland facility is completed and more is known about the near-term outlook for the economy and the steel industry."

Correnti continued, "The Company recently released financial results for the fourth quarter ended June 30, 2001, which reflected the best performance of the fiscal year by the continuing operations. Within a few days, we plan to release results for the first quarter ended September 30, 2001, which we expect will reflect continued improvement in financial performance of our continuing operations. Also, we are progressing with Corporacion Sidenor regarding its purchase of our Cleveland facility, and we expect to complete a definitive agreement for the transaction in early November.

Correnti said, "The Company remains in compliance with the covenants under our financing agreements, and we expect to maintain sufficient liquidity and availability under our revolver to conduct operations as normal until the maturity of the revolver on April 1, 2002. Obviously, we will continue discussions with our lenders regarding restructuring, refinancing or extension of the debt due April 1, 2002. We appreciate the past support of our lenders during very difficult times in the industry, and we will continue to seek their support in the days ahead."

Correnti continued, "During the past year, we have also maintained regular and open dialogue with our suppliers, vendors and customers. Our management has been candid and forthcoming with these groups, and we have kept them apprised of the status of the Company's debt. We appreciate the confidence and support of these constituents during difficult times in the industry. We will continue to solicit their support as we continue our quest of returning Birmingham Steel to profitability."

Correnti concluded, "These are uncertain times for the U.S. and throughout the world. We believe shipments, pricing and margins will be under pressure for the remainder of 2001 and for at least the first half of 2002. Although the prevalent sentiment is that the overall economic environment will be challenging in the near-term, we believe the long-term outlook is promising for construction and steel products such as rebar and merchant products."

Birmingham Steel operates in the mini-mill sector of the steel industry and conducts operations at facilities located across the United States. The common stock of Birmingham Steel is traded on the New York Stock Exchange under the symbol "BIR."

Except for historical information, the matters described in the press release are forward-looking statements within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including economic conditions, market demand factors, equipment breakdowns or failures, the Company's continued compliance with its financing arrangements and its principal debt agreements, as well as other risks described from time to time in the Company's periodic and special filings with the Securities and Exchange Commission. Any forward-looking statements contained in this document speak only as of the date hereof, and the Company disclaims any intent or obligation to update such forward-looking statements.