UBS Warburg, Goldman Sachs and CIT Group are set to lead International Steel Group's (ISG) $1 billion bank deal backing its $1.5 billion acquisition of Bethlehem Steel. The asset-based credit includes a $400 million "B" piece, a $300 million "A" loan and a $300 million revolver, according to a banker familiar with the deal. He said pricing on the "B" will fall in the range of LIBOR plus 31/4-33/ 4%, while the pro rata should price between LIBOR plus 23/4% and 31/4%. Final ratings, expected between B and BB, will determine the exact pricing, he added. The deal should launch at the end of March or early April, the banker noted. A UBS official declined to comment, while Goldman and CIT bankers did not return calls.
Bankrupt Bethlehem Steel reached an agreement to sell essentially all of its assets to ISG earlier last month. It expects the transaction to close early next quarter. The acquisition would create the largest steel company in North America with shipment capability of 16 million tons. "That'll be interesting to see how that [transaction] gets done," said an investor. "That [acquisition] is really a benchmark," he added. Calls to Mitchell Hecht, ISG's cfo, were not returned.
Cleveland-based ISG was organized in April 2002 by buyout firm WL Ross & Co. to acquire steel making assets and restructure those facilities to be internationally competitive. ISG acquired and revived bankrupt steel company LTV last year, shedding retiree health costs and employees in the process.