Schnitzer Steel Industries, Inc. and Hugo Neu Corp. have entered into a Master Agreement that provides for the separation and termination of various joint venture relationships.

With the objective of providing an equitable division of the various joint venture operations, Hugo Neu will assume total ownership of the joint venture operations in New York, New Jersey and California, including the scrap processing facilities, marine terminals and related ancillary satellite sites. Schnitzer will take over the joint ventures' various New England operations in Massachusetts, New Hampshire, Rhode Island and Maine. Schnitzer will also acquire 100% ownership of the Hawaii operations of a Hugo Neu subsidiary, and receive a payment of cash.

Pursuant to the Master Agreement, a Schnitzer subsidiary will acquire the 50% interests in various scrap metal joint ventures based in New England that are owned by a Hugo Neu subsidiary. These joint ventures will thus become wholly owned by the Schnitzer subsidiary. A subsidiary of Schnitzer will also acquire Hugo Neu's wholly-owned scrap metal and green waste recycling business in Hawaii.

Subsidiaries of Hugo Neu will acquire Schnitzer's 50% interests in various joint ventures based in New Jersey, New York and California. These joint ventures will become wholly owned by subsidiaries of HNC. Further, Hugo Neu Schnitzer Global Trade LLC, a joint venture engaged primarily in scrap metal trading, will be split, with HNS Global Trade redeeming Schnitzer's 50% membership interest in it in exchange for the assets and liabilities of HNS Global Trade's trading business in Russia, Poland, Denmark, Finland, Norway and Sweden.

A subsidiary of Hugo Neu will pay a subsidiary of Schnitzer approximately $52 million in cash at closing. Additionally, Schnitzer and Hugo Neu and certain of their affiliates will enter into a number of related agreements governing, among other things, employee transitional issues, benefit plans, scrap sales and other transitional services. Schnitzer, Hugo Neu and certain of their affiliates will also execute and deliver mutual global releases.

In order to provide for an equitable division of joint venture assets and liabilities, the companies evaluated and divided the business primarily using historical earnings trends.

The Master Agreement has been approved by the Board of Directors of each of Schnitzer Steel and Hugo Neu. Transactions contemplated by the Master Agreement are subject to a number of conditions, including obtaining certain third party consents, permit amendments or transfers, Hugo Neu obtaining financing sufficient to fund the cash payment to be made to Schnitzer and the repayment of certain existing indebtedness, and other customary closing conditions. With respect to the financing contingency, Hugo Neu has confirmed to Schnitzer that it has entered into a definitive credit agreement sufficient to provide the required financing, subject to customary closing conditions. The parties currently expect that the closing of the transaction will occur in the third calendar quarter of 2005.

Headquartered in New York City, Hugo Neu Corp. is a privately owned company founded in 1947 by the late Hugo Neu and led by his son, John L. Neu. HNC is primarily engaged in the metal recycling and industrial real estate businesses, both directly and through its subsidiaries and joint ventures. After the split with Schnitzer, HNC will remain the largest exporter and one of the largest recyclers of steel scrap in the nation. HNC currently recycles all of New York City's post-consumer metal, plastic and glass.

Schnitzer Steel Industries, Inc. is one of the nation's largest recyclers of ferrous metals, a leading self-service used auto parts retailer with 30 locations in the U.S. and Canada, and manufacturer of finished steel products. Prior to the split with its joint venture partners, Schnitzer processes approximately 5.2 million tons of recycled ferrous metals per year as well as brokers nearly 3.0 million tons through various brokerage arrangements. In addition, the company's steel mill has an annual production capacity of approximately 700,000 tons of finished steel products. The company and its joint venture partners operate primarily along the West Coast and Northeastern seaboard of the United States.