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Ispat completes Inland Steel deal

Ispat completes Inland Steel deal

Pension guarantee agreement final piece to acquisition puzzle

LONDON -- Ispat International NV completed the acquisition of Inland Steel

Industries Inc.'s steel unit for $1.4 billion late Thursday, making Ispat the

world's seventh-largest steelmaker and giving it a foothold in the U.S. market.

London-based Ispat paid $888 million in cash for the Inland Steel Co. business

and assumed $510 million in debt. The takeover will nearly double Ispat's

annual sales to about $4.5 billion.

"Our leadership in the mini-mill process and the combined expertise of both

Ispat International and Inland Steel Co. should make Inland Steel one of the

lowest cost and most profitable steel producers in the U.S.," said Lakshmi

Mittal, Ispat International's founder, chairman and chief executive officer.

Ispat and Inland Steel Industries also agreed to put up guarantees for more

than half of Inland's $600 million pension liability, according to the Pension

Benefit Guaranty Corp.

Under the agreement with the federal agency that guarantees pension benefits to

42 million Americans, the steelmakers will make an immediate cash payment of

$25 million into the plan and put up $305 million more in guarantees.

Chicago-based Inland's pension plan covers 27,000 workers and retirees.

The guarantees include $20 million in future cash payments, a $160 million

letter of credit, $75 million in liens on Inland assets and a $50 million

guarantee from Ryerson Tull. The agreement is effective until at least July

2003.

Inland's pension plan has assets valued at $1.9 billion and liabilities of $2.5

billion, the agency said.

The United Steelworkers of America, representing 8,000 Inland workers in

Indiana and Michigan, agreed in May not to block the sale of Inland's steel

unit to Ispat.

Ispat, founded in 1989, was built through acquisitions around the world and has

a reputation for slashing costs to increase profits. Chicago-based Inland, a

major supplier to the auto, construction and appliance markets, gives Ispat

facilities to process unfinished steel slabs from Ispat's mills in Canada,

Mexico and Trinidad.

Inland plans to distribute the proceeds of the sale to shareholders through a

Dutch auction. The company hasn't yet disclosed terms of the auction, in which

Inland would give a range of prices at which it would buy its common shares.

The rest of Inland, including an acid-recycling business and an 87 percent

stake in metals distributor Ryerson Tull Inc., is expected to be combined with

the 13 percent of Ryerson Tull that is separately traded. Details haven't been

worked out.

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