ISG Considers Bethlehem Purchase

The New York-based ownership group of International Steel Group (ISG) is reportedly considering purchasing bankrupt steel company Bethlehem Steel Corp., Bethlehem, Pa.

According to a Reuters report, Bethlehem officials have acknowledged they are in talks that could lead to the company’s sale to Cleveland-based ISG, which is owned by New York buyout firm W.L. Ross & Co.

Bethlehem Steel has reportedly given ISG 60 days to examine its plants and books of accounts to help the company structure an offer.

As the deal will reportedly take shape, Bethlehem Steel would emerge from Chapter 11 bankruptcy and Wilbur Ross, founder of W.L. Ross & Co, would become a major force in the North American steel market.

If a takeover occurs, ISG would bypass U.S. Steel Corp., Pittsburgh, to become the biggest integrated steel maker in the U.S. with annual capacity of 20 million tons. ISG is also in the process of buying electric arc steelmaker Acme Metals Inc., Chicago.

ISG got its start when Ross purchased the assets of the former Cleveland-based LTV Steel in early 2001. The 7 million-tons-per-year company was renamed ISG, and the pension and debt obligations of LTV were not on the books of the new company.

That would not necessarily be the case with a Bethlehem buyout, creating a potential negotiating hurdle. At the former LTV plants, Ross was able to secure more flexible union rules, something else he is expected to ask for from Bethlehem employees.

“We believe we have established a very good working relationship with the unions,” Ross told Reuters. “We are hopeful that the unions will look favorably to this transaction.”