ISG would buy Burns Harbor, Ind., plant, other Bethlehem facilities. (Photo courtesy of Bethlehem Steel Corp.)

International Steel Group Inc., the successor to the former LTV Corp., has offered $1.5 billion to acquire the steelmaking assets of Bethlehem Steel Corp., which has been operating under Chapter 11 bankruptcy protection since October 2001. If the deal goes through, the combined company would be North America's largest steelmaker, Bethlehem and ISG said, with annual shipments of about 16 million tons.

Construction is one of the markets served by Bethlehem, the No. 2 integrated steel producer in the U.S. The Bethlehem, Pa.-based company's product line includes carbon and alloy plate and pipe.

The offer, received on Jan. 6, includes "a significant portion of cash but also substantial assumption of current Bethlehem liabilities," said Robert S. Miller, Jr., Bethlehem's chairman and CEO. Miller didn't specify how much cash ISG offered or total liabilities it would take on.

He said that under the proposal the headquarters of the combined company would be in the Cleveland area. If the bid is approved, it would mark the end of nearly a century as an independent company for Bethlehem, which was founded in 1904 by Charles M. Schwab.

Miller said the company would review the roughly 100-page proposal with its advisors and creditors, but he added, "In concept, this is a very attractive proposition." He said.

Miller said, "The combination of the ISG-United Steelworkers new labor agreement and the prospect for the business combination, taken together, constitutes about the most dramatic thing that's happened to the American steel industry in the last 20 years." He said, "You not only have created a major new player on the global stage but you also will have broken through what has been a severe cost disadvantage for the integrated steel industry, by developing a radically different working relationship between the steel industry and the steelworkers' union.

If Bethlehem does formally endorse the ISG bid, it still would have to be approved by the bankruptcy court.

Miller also noted that "other potential bidders will have the opportunity to make competing bids."

ISG, set up by the investment company WL Ross & Co LLC last spring, said it expects negotiations with Bethlehem to be wrapped up "within the next week to 10 days."