Bethlehem Steel Corp. said its board approved a takeover offer by International Steel Group, one of the last hurdles in creating what it claims would be the No. 1 North American steel company.
The agreement, still subject to approval by its creditors and a U.S. bankruptcy court, is targeted for completion by April, Chief Executive Robert Miller said in an interview.
"But it really depends on how quickly the court moves, and how complicated it gets if there are any other bidders," Mr. Miller said.
Terms of the deal were not disclosed. However, International Steel, backed by the New York buyout firm W.L. Ross & Co., on Jan. 6 made an initial offer of U.S. $1.5 billion for most of Bethlehem's assets. International Steel owns assets of bankrupt steelmakers LTV Steel and Acme Metals.
The deal sets aside $100 million to reduce staff through early retirement offers. The company hopes to cut between 3,000 and 4,000 people from its total work force of about 11,000, Mr. Miller said.
The deal would include a precedent-setting low-cost labor contract that most expect to play a crucial role in the future of consolidating the U.S. steel industry.
Bethlehem also said it wants to terminate health and life insurance benefits for "substantially" all of its retirees and their dependents.
"Between pensions and health care we had about a $7 billion liability, which completely overwhelms the value of the assets of Bethlehem," Mr. Miller said. "At the end of the day, you have to face the reality of the situation."
The steelworkers' union has condemned the plan, calling it "morally callous," although a spokesman for the union said the announcement was not a surprise.
Bethlehem said it would end the benefits on March 31 for about 95,000 people "because we cannot pay the obligations ... now or in the future." Bankruptcy court approval is needed to eliminate the benefits.
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