For Immediate Release
Public Relations Division
Public Affairs Department
1170 Eighth Avenue
Bethlehem, PA 18016-7699
(610) 694-3711 - Phone
(610) 694-1509 - Fax
PITTSBURGH and BETHLEHEM, Pa., November 20, 1998 -- Allegheny Teledyne Incorporated (NYSE:ALT) and Bethlehem Steel Corporation (NYSE:BS) announced jointly today that they have closed the asset sale agreement previously signed by both companies and have begun to implement the related conversion services and hot band supply agreements.
Under the previously announced asset sale agreement, Allegheny Ludlum Corporation, a subsidiary of Allegheny Teledyne, acquired certain assets owned by Bethlehem, which Bethlehem acquired from Lukens Inc. in May 1998. These assets include the melting and hot rolling facilities located at the Houston, Pa., plant and the wide anneal and pickle line at the Massillon, Ohio, plant.
Under the previously announced conversion services agreement, Bethlehem has agreed, for a 20-year period, to provide Allegheny Ludlum exclusive access to the Coatesville, Pa., melt shop and caster for the production of stainless steel slabs and to the Conshohocken, Pa., 110-inch Steckel mill for the rolling of stainless steel slabs and stainless precipitation hardening grades, maraging grades, and nickel and nickel-based alloys.
After jointly conducting due diligence, Allegheny Ludlum and Bethlehem agreed that improvements to the Steckel mill would enhance performance for the benefit of both parties, and they will share in the cost of certain of these improvements. Using independent consultants, Allegheny Ludlum and Bethlehem concluded that improvements to the computer control system, increasing the power of the roughing mill and undertaking other projects to improve the mill's capability will enhance performance of the mill for carbon, alloy and stainless steel. Two 8,000 horsepower roughing mill motors will be installed, and Allegheny Ludlum will share in the ownership of the motors up to a maximum investment of $9 million. The total cost of all improvements to the Steckel mill is currently estimated to be about $25 million.
At the closing, Allegheny Ludlum paid Bethlehem $105 million in cash of the previously announced $175 million asset purchase price, and issued a non-interest bearing note for the remaining $70 million. The note will be paid after the improvements to the Steckel mill are completed in about one year and the mill returns to a regularly scheduled operating basis.
In addition, as previously agreed, Allegheny Ludlum will supply stainless hot bands to the cold finishing plants of Bethlehem located in Washington, Pa., and Massillon, Ohio.
"We are pleased to complete the closing of the agreements with Bethlehem Steel. Allegheny Ludlum is moving quickly to take operating control of the assets acquired so that our customers are supplied without any transitional delays. We expect to have a long and mutually beneficial relationship with Bethlehem Steel," said Richard P. Simmons, chairman, president and chief executive officer of Allegheny Teledyne.
Curtis H. Barnette, Bethlehem's chairman and chief executive officer, said, "We are very pleased to complete the closing with Allegheny and to begin this long-term business association, which we expect will be in the mutual best interests of both of our companies."
Allegheny Teledyne Incorporated is a diversified manufacturing company serving global markets with specialty metals, aerospace, electronic, industrial and consumer products. The company is one of the largest and most diversified specialty metals producers in the world. With talented people using innovative technologies and systems, Allegheny Teledyne's goal is to be the low-cost, high-quality supplier to global markets. Allegheny Teledyne's website can be found at http://www.alleghenyteledyne.com.
Bethlehem Steel is one of the nation's largest steel producers and primarily manufactures and sells a wide variety of steel mill products. Bethlehem's website can be found at https://www.bethsteel.com/.
