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NEWS                            [NORTHWESTERN STEEL AND WIRE COMPANY LETTERHEAD]
RELEASE


     FOR IMMEDIATE RELEASE           CONTACT:  Thomas M. Vercillo
                                               Vice President and CFO
                                               815/625-2500, Ext. 2240

                                               Andrew R. Moore
                                               Vice President -- Human Resources
                                               815-625-2500, ext. 2280



                       NORTHWESTERN STEEL AND WIRE COMPANY
                         FILES FOR CHAPTER 11 PROTECTION

                  COMPANY WILL CONTINUE TO OPERATE NORMALLY AND
              EXPECTS TO FILE PLAN OF REORGANIZATION IN NEAR FUTURE


         Sterling, Illinois - December 20, 2000 -- Northwestern Steel and Wire
Company (the "Company") (OTC: NWSW) announced that yesterday it filed a
voluntary petition for reorganization under Chapter 11 of the United States
Bankruptcy Code with the Bankruptcy Court for the Northern District of Illinois,
located in Rockford, Illinois. The Company expects to continue to operate in the
ordinary course during the reorganization proceeding and file a reorganization
plan shortly. While the Company recognizes that a successful reorganization will
require negotiations with all of its major constituencies, including its
bondholders, lenders and union, the Company anticipates that its plan will have
the support of those constituencies. Accordingly, the Company hopes to emerge
from Chapter 11 by June 2001.

         Frederick J. Rocchio, President and CEO, stated, "We voluntarily filed
for Chapter 11 relief in order to implement a substantial restructuring of our
balance sheet." Very soon, the Company will file a plan of reorganization that
includes the conversion of all its $115 million of corporate bond obligations to
equity. The Company anticipates that the Steering Committee of holders of the
Company's 9.5% Senior Notes due 2001 will support the contemplated plan of
reorganization. "Our plan will enable the Company to restructure our debt and
implement a strategic plan that will help us operate as a profitable, low-cost
manufacturer of high quality steel products," Mr. Rocchio added. The Company
attributed the need for a capital restructuring to an industry-wide crisis in
the domestic steel industry brought on by unfair foreign competition.

         That crisis caused Congress to pass the Steel Loan Guarantee Act, under
which the Company received approval in August 2000 for a federal guarantee of
$170 million of proposed financing. Continued adverse steel market conditions
and bank loan market concerns over the specific terms of the Steel Loan
Guarantee have prevented the completion to this date of any financing to any
steel producer under the Steel Loan Guarantee Program. Nevertheless, recent
changes in the regulations under the Guarantee Program have encouraged the
Company to continue to seek a financing transaction under that federal program.




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         "We believe that a voluntary Chapter 11 proceeding is the best way for
the Company to insure continued stable operations, protect jobs and service our
customers" said Mr. Rocchio "This restructuring in no way deters us in our
pursuit of the capital needed to complete our mill modernization project, and we
therefore intend to continue to pursue a transaction under the Steel Loan
Guarantee Act."

         Mr. Rocchio continued "With the continued support of our employees,
suppliers, customers and creditors, we believe we can emerge from Chapter 11 in
a short time as a financially stable competitor in our market."

         As a result of the Chapter 11 filing, the Company has also terminated
its exchange and consent solicitation relating to its 9.5% Senior Notes due
2001.

         Except for historical information matters discussed herein contain
forward-looking information and describe the Company's belief concerning future
performance, business conditions and outlook based on currently available
information. The Company has identified these "forward-looking" statements by
words such as "anticipates", "expects", "believes", "estimates" and "appears"
and similar expressions. Risk and uncertainties which could cause actual results
of performance to differ materially from those expressed herein include the
following: a significant downturn in the domestic steel industry generally;
unanticipated material problems directly affecting the Company; volumes of
product and product shipments; changes in product mix and pricing; costs of
scrap steel and other raw material inputs; changes in domestic manufacturing
capacity; the level of non-residential construction and overall economic growth
in the United States; the level of imported products in the Company's markets;
changes in legislative or regulatory requirements; the ability to have the
Company's new furnace become fully operational and to perform in accordance with
specifications; modernizing or replacing the Company's existing rolling mills;
the need to have vendors continue to supply the Company with goods and services
during the bankruptcy proceeding; the ability to have the Company's
reorganization plan approved; and the Company's ability to improve its current
liquidity shortage. The Company assumes no obligation to update the information
contained herein.

         Founded in 1879, the Company is a major mini-mill producer of
structural steel components that include wide flange beams, channels, angles and
merchant bars, as well as rod and selected wire products. The structural
products are used in a wide variety of commercial, industrial and residential
construction applications.