updated 2/18/2004 10:48:59 AM ET 2004-02-18T15:48:59

Bankrupt Weirton Steel Corp. has accepted a $255 million buyout offer from Ohio’s International Steel Group Inc., an industry giant built from the remnants of other down-and-out companies.

If approved, 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 only 21 percent.

The long-anticipated purchase also would expand the nation’s No. 2 integrated steel maker to include Weirton’s tin-plate mill, one of the largest in the country. ISG would become the No. 1 integrated steel producer, a union official said.

Weirton Chief Executive Officer D. Leonard Wise called the merger good news for the company, its customers and the community.

“Our goal has been to secure the best possible solution for all of our stakeholders and to maintain a steel operation in Weirton,” Wise said in a statement early Wednesday. “We believe ISG provides the answer.”

“We think it’s essential to move toward further consolidation of the industry,” ISG Chairman Wilbur Ross said in a telephone interview from New York. “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.”

The $255 million offer included 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.

Weirton Steel, the nation’s fifth-largest integrated producer and No. 2 producer of tin-plated steel, sought Chapter 11 protection in May 2003 after losing money for five years.

It has struggled ever since to emerge, unable to appease creditors or strike a new agreement with its 2,700-member Independent Steelworkers Union.

The company was further hurt in recent weeks by a shortage of coke, the fuel used for its two blast furnaces, and had to idle one furnace, leading to some 800 layoffs.

After Weirton files the details of ISG’s offer with U.S. Bankruptcy Court in Wheeling in the next few days, a judge will solicit other bids. It may take as long as 45 days to finalize the sale.

Independent Steelworkers Union President Mark Glyptis said the union negotiated a deal with ISG in which the company would provide more than $3.7 million in “seed money” for a new Voluntary Employee Beneficiary Association to provide health insurance to retirees. But he said they would be required to pay premiums.

Some 10,000 retirees, dependents and surviving spouses had been receiving free insurance coverage.

The deal “doesn’t come without pain,” Glyptis said. “There will be pain associated with it ... but Weirton could not survive as a stand-alone in the long term.”

Weirton’s strategy for remaining a stand-alone company also had called for the creation of a VEBA that did require retirees to pay premiums. But many retirees complained they accepted lower wages in their younger years in exchange for the promise of free, lifelong health care. Wise said those promises were made at a time when health costs were lower and the company’s fiscal position was stronger.

The VEBA plan would not cover 2,000 nonunion retirees, including former management employees.

The buyout would include 300 layoffs in addition to the 950 Weirton Steel planned to cut as part of its bankruptcy reorganization plan, Glyptis said.

Weirton Steel, in West Virginia’s Northern Panhandle sandwiched between Ohio and Pennsylvania, was part of National Steel Corp. for decades until workers bought it in 1984. They had to begin selling stock to outsiders in 1989.

ISG was created in 2002 when New York buyout firm WL Ross & Co. purchased the remnants of bankrupt LTV Corp., then acquired Bethlehem Steel and Acme Metals. It now is second in size only to Pittsburgh-based U.S. Steel Corp.

ISG can cast more than 18 million tons of steel a year. It has plants in 10 states, including facilities in Cleveland and East Chicago, Ind., that make flat-rolled steel. It also runs a finishing plant in Hennepin, Ill., and a coke plant in Warren, Ohio.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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