WHEELING, W.Va., Dec. 28 /PRNewswire-FirstCall/ -- Wheeling-Pittsburgh
Steel Corporation (Nasdaq: WPSC) and Severstal North America, Inc. on December
23, 2004, signed a non-binding letter of intent to create a joint venture
involving Wheeling-Pittsburgh Steel's Coke Plant, located in Follansbee, WV.
The letter of intent calls for entering into a definitive joint venture
closing on or before March 31, 2005.
At the closing of a definitive joint venture agreement, Wheeling-
Pittsburgh Steel will contribute the assets of its Follansbee Coke Plant to
the joint venture and Severstal will contribute most of the capital to rebuild
the facility over the next four years. Severstal is expected to commit $140
million to the joint venture over four years, which will be used for such coke
plant capital improvements. In addition, Severstal would make a $20 million
payment directly to Wheeling-Pittsburgh Steel at the closing of the joint
venture. The proposed agreement, after all capital contributions are received
from Severstal, would provide Severstal with a 50 percent ownership of the
joint venture. At that time each party would take 50 percent of the coke
produced by the joint venture.
The Follansbee Coke Plant is located on the Ohio River and consists of one
six-meter battery and three three-meter batteries. Total cokemaking capacity
is expected to be in excess of one million tons per year after completion of
the capital improvements. The letter of intent also provides for a management
agreement to be entered into at the closing of the joint venture, pursuant to
which Wheeling-Pittsburgh Steel would continue to operate the facility for the
joint venture. The joint venture will produce coke for the benefit of
Wheeling-Pittsburgh Steel and Severstal.
"This agreement is good for Wheeling-Pittsburgh Steel, the State of West
Virginia and the domestic steel industry," said James G. Bradley, Chairman,
President and CEO of Wheeling-Pittsburgh Steel. "It would ensure a
significant investment in West Virginia and in domestic cokemaking."
Bradley added, "The coke market has been highly volatile. This transaction
minimizes our risk while assuring an adequate coke supply for our remaining
blast furnace and freeing up capital for potential future value-added
downstream investments."
Severstal North America, Inc. is an integrated flat rolled sheet steel
producer that primarily serves the automotive, converter and service center
markets in North America. Its manufacturing facilities and corporate offices
are located in Dearborn, MI with approximately 2,200 employees. Severstal
North America, Inc. is a wholly owned subsidiary of OAO Severstal, the second
largest steel producer in Russia. In January 2004, OAO Severstal acquired the
assets of the former Rouge Industries, Inc., including its primary subsidiary
Rouge Steel Company.
Wheeling-Pittsburgh Steel Corporation is a metal products company with
approximately 3,100 employees. It has facilities in Steubenville, Mingo
Junction, Yorkville and Martins Ferry, OH; Beech Bottom and Follansbee, WV;
and Allenport, PA.
Statements in this release that express a belief, expectation or
intention, as well as those which are not historical fact, are forward
looking. They involve a number of risks and uncertainties, which may cause
actual results to differ materially from such forward-looking statements. For
more information about these risks and uncertainties, please refer to
Wheeling-Pittsburgh, Corporation's annual report on Form 10-K for the period
ending December 31, 2003, and other filings, with the Securities and Exchange
Commission.
SOURCE Wheeling-Pittsburgh Steel Corporation
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Related links:
http://www.wpsc.com
Company News On-Call:
http://www.prnewswire.com/comp/967451.html
CONTACT:
Jim Kosowski of Wheeling-Pittsburgh Steel
Corporation, +1-304-234-2440
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