WEIRTON, W.Va. | International Steel Group Inc. struck a $255 million deal for bankrupt Weirton Steel Corp. on Wednesday, giving the 2-year-old company a chance to surpass U.S. Steel as the nation's largest steel producer.
ISG of Cleveland, built from the remains of other struggling or bankrupt steelmakers, would acquire one of the nation's largest tin-plate mills if its offer for Weirton wins approval from a bankruptcy judge.
Given the complexity of the sale and the need for an agreement with the Independent Steelworkers Union, Weirton Chief Executive D. Leonard Wise said ISG probably will prevail in the court-run auction required to complete the deal.
''We have had some other interested parties, but no one who was ready to come to the table,'' Wise said. ''The odds are very strong ISG will complete this deal and any bidding will perhaps be minimal. But we invite anyone to make an offer.''
If approved by the court, the deal would end a labor legacy at the West Virginia plant, once the largest American company owned 100 percent by its workers. Weirton employees now own 21 percent.
The $255 million offer includes cash and the assumption of Weirton Steel's liabilities. Company spokesman Gregg Warren declined to release details of the offer, saying they would be included in a bankruptcy court filing.
U.S. Steel Corp., currently the No. 1 domestic producer, confirmed that consummating the Weirton deal would give ISG the capacity to become the nation's top steelmaker.
If it were to keep all of Weirton's operations open, ISG could produce 21 million tons a year, compared with 19.4 million tons for U.S. Steel of Pittsburgh, U.S. Steel spokesman John Armstrong said.
ISG chairman Wilbur Ross said ''it's essential to move toward further consolidation of the industry.''
''We've been speaking for quite a while about the need for there being a smaller number of quite a bit larger companies that are more diverse,'' Ross said in a telephone interview from New York.
But industry analyst Charles Bradford considers Weirton an unattractive acquisition because it needs too much modernization, has too many employees and sits too far from its raw materials and customers.
ISG was created in 2002 when Ross purchased the assets of bankrupt LTV Corp., then Bethlehem Steel and Acme Metals. In December, the company sold 16.5 million shares of stock in an initial public offering, raising $462 million.
In the wake of Wednesday's news, ISG shares rose $1.89, or 5.1 percent, to close at $38.64 in trading on the New York Stock Exchange.
The company has plants in 10 states, including facilities in Cleveland and East Chicago, Ind., that make flat-rolled steel. It can cast more than 18 million tons of steel a year. ISG has closed operations in Bethlehem, except for its Homer Research Laboratories.
ISG has created a new model for efficiency, dramatically slashing the number of workers and their wages to cut production costs.
Weirton Steel, meanwhile, sought Chapter 11 protection in May 2003 after losing money for five years.
Executives and union leaders had hoped to keep the company independent, banking on a $145 million loan package approved last fall by the federal Emergency Steel Loan Guarantee Program.
But Wise said that would not have been enough to return Weirton to solvency and the company never tapped into the loan program.
ISU President Mark Glyptis predicted workers will ''welcome ISG with both arms'' and praised the Cleveland company for its humane treatment of displaced workers and its good wages.
''Without question, I view this as a godsend,'' he said.
But he said the sale will mean additional job cuts. About 1,100 union and nonunion jobs may be permanently eliminated, leaving Weirton with a work force of about 2,000. That number could change, depending on whether ISG operates one or two blast furnaces.Copyright © 2015, Los Angeles Times