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                                                                    EXHIBIT 99.1
 
                       [PHILIP SERVICES CORP. LETTERHEAD]
 
                                  NEWS RELEASE
 
           PHILIP SERVICES NEGOTIATES TERM SHEET TO RESTRUCTURE DEBT
                           WITH LENDER SUB-COMMITTEE
 
     Hamilton, Ontario, January 11, 1999 -- Philip Services Corp. (NYSE/TSE/ME:
PHV) today announced that it has negotiated a term sheet with a sub-committee of
the Steering Committee of its lenders, who collectively hold the largest portion
of the more than US$1 billion of outstanding Philip bank debt. The term sheet
sets forth the principal terms for the restructuring of Philip under a
prepackaged reorganization plan that will allow the Company to conduct business
as usual throughout the restructuring process. Philip will now proceed to
negotiate a lock-up agreement, and together with the sub-committee will seek the
necessary two-thirds support of its lenders for the proposed restructuring plan.
 
     Under the terms of the proposed restructuring plan, US$550 million of
existing syndicate debt will be restructured into US$350 million of senior
secured term debt and US$200 million of secured payment in kind notes, both with
a term of five years. Pre-payments of the debt will be based on a formula that
takes into account excess cash flow and proceeds of any asset dispositions. The
balance of the existing syndicate debt of approximately US$550 million will be
exchanged for 90% of the common shares of the restructured company. Existing
shareholders will retain up to 10% of the common shares of the restructured
company.
 
     The term sheet permits debtor in possession financing to be provided of up
to US$100 million, which is currently being negotiated. This debtor in
possession financing will support the Company's working capital requirements
during the restructuring process. The term sheet also permits additional
financing of up to US$170 million, less proceeds utilized from the sale of
aluminum operations, to repay the debtor in possession financing and support
Philip's working capital requirements when it completes the restructuring. Under
the terms of the proposed restructuring plan, the Company will not proceed with
the disposition of its U.S., U.K. and Canadian Ferrous operations. This decision
recognizes the ongoing value of these metals operations in a restructured
Philip.
 
     It is anticipated the Company will file a voluntary prepackaged
reorganization plan by March 15, 1999 and emerge from the process by June 30,
1999. It is the Company's expectation that the plan will protect its employees
and normal course trade suppliers, who will remain unimpaired throughout the
restructuring process.
 
     "We have negotiated the basis for a restructuring plan that recognizes the
long term strength and value of Philip, and provides the necessary financial
stability to see this value realized," said Allen Fracassi, Chief Executive
Officer. "It protects the interests of our employees and trade suppliers
throughout the restructuring process, and provides all stakeholders with an
interest in the restructured company. We look forward to receiving the necessary
lender approval and moving quickly to emerge from a prepackaged restructuring."
 
     Under the terms of the proposed restructuring plan, the lenders will
nominate the Board of Directors of the restructured company, which will include
two positions to be filled by existing Philip board members.
 
     Philip's standstill agreement with Carl Icahn of High River Limited
Partnership III L.P. and American Real Estate Holdings, L.P. and Foothill
Partners III L.P., which outlined the terms of a different restructuring
proposal, expired on January 8, 1999.
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     Philip Services is an integrated metals recovery and industrial services
company with operations throughout the United States, Canada and Europe. Philip
provides ferrous and non-ferrous processing services, together with diversified
industrial outsourcing services, to all major industry sectors.
 
                            ------------------------
 
Contact: Lynda Kuhn
 
       VP Corporate Communications and Investor Relations
       (905) 540-6788/6789