United States Steel Corporation sells assets for $500 million

United States Steel Corporation has signed a letter of intent to sell its coke operations, its Minnesota iron ore operations, and its wholly owned transportation services subsidiary for $500 million.

United States Steel Corporation has signed a letter of intent to sell its Clairton, Pennsylvania, and Gary, Indiana, coke operations, its Minnesota iron ore operations, and its wholly owned transportation services subsidiary Transtar, Inc., to an entity formed by affiliates of Apollo Management, L.P. of New York City.

The transaction is subject to the negotiation of definitive agreements and other customary conditions, including approvals from the board of directors, lenders and regulatory agencies.

The parties plan to reach definitive agreements by year-end 2002 with closure of the deal to follow in the first quarter of 2003.

Under terms of the letter of intent, it is anticipated that US Steel would receive approximately $500 million in cash and retain about a 20 percent interest in the new company, with the new company assuming all collective bargaining agreements, certain employee benefit obligations and certain other liabilities.

US Steel currently estimates the transaction could result in a pre-tax loss of up to $300 million.

The new company and US Steel plan to enter into long-term contracts to supply US Steel with its domestic iron ore and coke requirements and to provide US Steel with transportation services.

Apollo Management, formed in 1990, is a private equity fund based in New York. Since its inception, Apollo and its affiliates have managed the investment of over $13 billion in capital in a wide variety of industries.