PHILADELPHIA (AP) — A potential investor said he intends to make an offer Monday for all or part of the assets of Bethlehem Steel, though it probably will be less than many creditors of the bankrupt steelmaker hope for.
"Unfortunately it will not be one that provides a significant recovery for the unsecured creditors, and none at all for the stockholders," said Wilbur Ross, chairman of International Steel Group.
Ross had to recalculate his offer after the federal government moved to take over Bethlehem's pension plan. The government takeover secured the benefits of pensioners to date, but had the effect of adding to costs ISG would face to rehabilitate the company.
Ross is a longtime investor in troubled companies who formed ISG after purchasing bankrupt LTV Corp. last spring.
He signed a 60-day agreement — which expires Monday — to negotiate exclusively with Bethlehem Steel concerning a possible merger.
"We are continuing to work on it . . . and resolve issues," Ross said Tuesday. "So far we haven't found anything that's a showstopper."
Robert S. Miller Jr., Bethlehem Steel's chief executive officer, said in a Dec. 23 statement that Bethlehem was "still actively pursuing the mutual due diligence with ISG." Bethlehem officials wouldn't comment other than to say the talks were still continuing, spokeswoman Bette Kovach said Tuesday.
"We'll be able to clarify the situation on (Monday)," said Mitch Hecht, ISG's chief financial officer. "They are detailed and complicated negotiations, and we wouldn't want to tip our direction before then."
ISG accountants resharpened their pencils after the U.S. Pension Benefit Guaranty Corp. proposed Dec. 17 to terminate the Bethlehem Steel pension plan and take over responsibility for benefits earned to date.
The pension plan at Bethlehem Steel, which filed for Chapter 11 bankruptcy protection Oct. 15, 2001, covers 95,000 workers and retirees. The PBGC estimated that it was underfunded by $4.3 billion.
Under a PBGC takeover, retirees would continue to receive monthly checks, and others who have earned eligibility for pensions would receive benefits on reaching retirement age, but the agency wouldn't be responsible for future pensions.
That forced ISG to scrap plans to cut the Bethlehem work force through early retirements, with the pension agency helping to bear the cost of the retirements.