Bethlehem Steel Files Chapter 11

Bethlehem, PA - Bethlehem Steel Corporation, the second-largest integrated steel manufacturer in the nation, announced that it has filed a voluntary petition under Chapter 11 of the Federal Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Despite nearly $300 million in net cost reductions since the middle of 1998, the company could not overcome the injury caused by record levels of unfairly traded steel imports and the slowing economy that have severely reduced prices, shipments and production. Since mid-1998, Bethlehem's revenues have been reduced over this same period by approximately $1.3 billion annually. The resulting operating losses of approximately $500 million and negative cash flow since the middle of 1998 have severely impaired the company's financial condition.

Bethlehem is seeking protection under Chapter 11 to provide the necessary time to stabilize the Company's finances and to develop and implement a strategic plan to return Bethlehem to sustained profitability. Key objectives of the plan will include improving the Company's capital structure, working with the United Steelworkers of America (USWA) to improve productivity and further reduce costs, particularly employment and healthcare costs, and finding a solution to its approximate $3-billion retiree healthcare obligation. While in Chapter 11, Bethlehem will continue to work with the federal government to remedy unfair trade practices, reduce excess global steel capacity and foster domestic steel industry consolidation.

The company has secured a loan commitment for $450-million Debtor-in-Possession (DIP) financing from GE Capital, subject to Court approval. This financing package, combined with other actions, should provide sufficient liquidity to meet ongoing operating needs. During these restructuring proceedings, Bethlehem will continue steel production without interruption with the same level of commitment to superior quality and service to our valued customer base. The company's key supplier relationships remain intact and the continued support of the supply base is essential to the development of a successful plan of reorganization.


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