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Bethlehem Steel: Press Room
  Bethlehem Steel: Press Room

Bethlehem Steel Proposes to Terminate Retiree Health, Insurance Plans

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    For Immediate Release

    BETHLEHEM, Pa., February 7, 2003 - Through the Section 1114 process of the Bankruptcy Code, Bethlehem Steel Corporation is seeking to eliminate health and life insurance benefits for substantially all of its retired workforce and their eligible dependents.

    By letter, dated February 6, 2003, Bethlehem made a proposal to the Section 1114 Committees to terminate such benefits on March 31, 2003.

    Bethlehem is seeking the termination of such benefits for about 95,000 persons "because we cannot pay the obligations for retiree health and life insurance now or in the future. Due to our financial situation and our impending sale of substantially all of our assets to International Steel Group (ISG), we must seek the court's approval to terminate these benefits. We find this decision extremely difficult, but unavoidable, and sincerely regret that circumstances have led us to this decision," said Robert S. Miller, chairman and chief executive officer.

    While Bethlehem Steel is seeking to eliminate retiree welfare benefits through the bankruptcy process, it is also working with the Section 1114 Committee to arrange for access to affordable health and life insurance coverage for its retirees. If such coverage can be arranged, it will be available to current and future retirees who have eligibility for coverage based on their company service.

    Currently, Bethlehem Steel is speaking with several health care vendors to solicit proposals for voluntary, 100-percent contributory insurance programs for our eligible retired populations. After the current coverages are terminated, Bethlehem "hopes to provide access to affordable medical and life insurance to eligible persons. Although Bethlehem will not be contributing any monies to such new coverages, we believe the size of our retiree population will help us find affordable rates for those persons interested in purchasing those plans," Mr. Miller said.

    Bethlehem Steel's executive management and financial advisers agreed on February 4 to recommend the sale of substantially all of Bethlehem's assets, both ongoing and surplus, to International Steel Group, Cleveland, Ohio. Bethlehem's board will consider that sale in a vote on February 8. If approved, Bethlehem and ISG will then complete an asset purchase agreement, which is expected to be submitted to Bethlehem's bankruptcy judge in about one to two weeks.

    As part of the agreement to sell Bethlehem's assets to ISG, neither party will assume retiree health or life insurance obligations, which averaged more than $19 million each month in 2002. Although most Bethlehem retirees pay a portion of the cost of their post-retirement health care benefits, the vast majority of the costs associated with the benefits are borne by Bethlehem. The corporation's aggregate actuarial obligations for all future retiree welfare benefits for its current retirees and eligible dependents is about $3 billion.


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