| October 2006 |  |
| Metal Industry News | |
|
|
|
IPSCO to Acquire NS Group “This transaction represents a compelling strategic opportunity for IPSCO to become the leading North American supplier to the robust oil and natural gas sector by significantly expanding our pipe product offering and production capacity, as well as our geographic footprint,” says David Sutherland, IPSCO’s president and CEO. “We are excited about the opportunity to enter the highly attractive seamless business in a leadership position and to enhance our position in welded products.” The transaction joins complementary product lines and broadens IPSCO’s energy product offering by adding NS Group’s seamless pipe and premium oilfield services provided by Ultra, NS Group’s recent acquisition. Following the transaction, IPSCO is expected to have combined annual revenues exceeding $4 billion. Under terms of the agreement, approved by both companies’ boards, IPSCO will acquire all of the outstanding shares of NS Group for $66 per share in cash, for an aggregate price of approximately $1.46 billion, including NS Group’s net cash. Officials estimated the transaction would generate more than $50 million in annual pre-tax operating synergies within three years. This acquisition will also position the company for further growth as a supplier to the energy sector. “From a production standpoint, this acquisition will enhance IPSCO’s steel short strategy by offering additional outlets for steel while preserving the competitive advantage of IPSCO’s fully integrated operating platform in both welded and seamless energy tubular products,” Sutherland says. “The combination of IPSCO and NS Group will provide our employees an opportunity to be part of a larger enterprise,” says Rene J. Robichaud, president and CEO of NS Group. “IPSCO has indicated that it is their intent to build on our exceptional platform and continue to grow the business over the long term.” The transaction is expected to close by the end of the year. Board Election May Decide Wheeling-Pitt officials say merger plans with CSN are still moving forward. “Reports that the CSN proposal has been terminated are simply not factual,” says James G. Bradley, chairman and CEO of the company. “I want to state clearly that there is no change in our commitment to finalize arrangements between CSN and Wheeling-Pittsburgh.” Wheeling-Pitt officials still hope for a vote on the merger talks in January during a special meeting of shareholders. Next month, the shareholders will choose between the company’s slate of current directors and a slate supported by Chicago-based Esmark, which hopes to seat its slate of directors as the first step in a move to acquire the steel producer. Esmark’s CEO James P. Bouchard remains hopeful that his steel service center company will eventually be teamed with Wheeling-Pitt. “Wheeling-Pitt’s extensive negotiations with CSN have failed to produce a transaction that is either acceptable to the USW or in the best interest of its shareholders,” Bouchard says. “Wheeling-Pitt is a commercially troubled company. The sooner we bring the proposed combination of Esmark and Wheeling-Pitt to a shareholder vote, the sooner we can begin to build Wheeling-Pitt’s balance sheet and position the company to reclaim a leadership role in the steel industry.” The Esmark deal has the support of the United Steelworkers. “We believe the Esmark proposal holds the greatest promise for Wheeling-Pitt’s future,” says David McCall, USW director of District 1. “In the union’s view, Esmark’s financial strength, management team and strategic vision will bring a strong commitment to rebuilding WPSC and the communities and steel families in the Ohio Valley. The union promises to use a successorship provision in the collective bargaining agreement to oppose any deal between Wheeling-Pitt and CSN. Bradley refutes the idea that the provision “prevents us from concluding the merger proposal between Wheeling-Pittsburgh and CSN.” A grievance filed by the union on the length of the right to bid period will be settled this month, company officials also announced. Wolverine Ends Merger Talks, “While business combination talks have been terminated, we are continuing, with the assistance of Rothschild Inc., to address the need to restructure the company’s balance sheet and reduce our leverage,” says Chip Manning, president and CEO. “With our cash balances, amounts available under our liquidity, facilities and anticipated cash flow from operations, we believe that we can continue to satisfy our existing working capital needs, debt service obligations, capital expenditures and other cash requirements in the near to mid-term.” In a move to restructure the balance sheet, Wolverine did announce plans to close its manufacturing facilities in Jackson, Tenn., and Montreal. In addition, the company will consolidate its U.S. wholesale distribution operation into its Decatur, Ala., plant. The actions constitute the first phase of the company’s restructuring and rationalization program, as a part of its strategic planning process focused on reducing its footprint in North America while continuing to serve and support its customers globally. The closing of the Jackson facility and consolidation of the U.S. wholesale distribution operation should be completed by the end of November. Operations at the Montreal facility will be phased out by first-quarter 2007. Customers of the Jackson plant will be serviced through the company’s global buy/resell programs. Wholesale and industrial copper tube manufactured in the Montreal operations will be transferred to the company’s other facilities, including its operations in London, Ontario, and Decatur. Closing of the Montreal plant will allow Wolverine to step away from its underperforming rod and bar product segment. Closing of the two production facilities and consolidation of the U.S. wholesale distribution facilities will require the company to take estimated restructuring and impairment charges totaling approximately $57.1 million. Nucor Selects Utah City The facility, with an annual capacity of 45,000 tons, will cost approximately $27 million. Operations are expected to begin by the first quarter of 2008. “The addition of this plant will increase our building systems capacity by 30 percent. We are very pleased to expand our presence in Utah,” says Hamilton Lott, Jr., executive vice president. In other action, Nucor has entered an agreement to purchase the assets of Verco Manufacturing Co. for a cash purchase price of $180 million, subject to post-closing adjustments. The transaction is expected to close in the fourth quarter. Verco produces steel floor and roof decking at three locations: Phoenix, Ariz.; Fontana, Calif.; and Antioch, Calif. With the addition of the Verco facilities, Nucor’s total annual deck capacity will exceed 500,000 tons. AK Starts Up New $8.5 million capital project to increase production capacity at AK Tube. In other action, the union representing locked-out workers at AK Steel’s Middletown plant, the International Machinists and Aerospace Workers Local 1943, rejected the company’s latest contract offer. The lockout is entering its eighth month. Chaparral Posts Record “This is our sixth consecutive quarter of earnings growth and we expect to continue similarly strong results as both domestic and international markets remain solid for structural products,” says Tommy A. Valenta, president and CEO. “Domestic prices for structural products remain competitive with global prices, and based on global demand we should continue to maintain healthy margins.” Shipments of 567,000 tons were 6 percent less than the comparable first quarter and sequential fourth quarter of fiscal year 2006 due to reduced levels of inventory available for sale. Average selling prices for the quarter of $656 per ton increased over 27 percent and 7.5 percent vs. the first quarter and fourth quarter of last fiscal year, respectively. Metal margins of $454 for the quarter were also 23 percent and 7.5 percent higher compared to the first and fourth quarters of last fiscal year, company officials reported. Carpenter Announces Four Profitability Initiatives The initiatives include:
The company previously committed to, at a minimum: sales growth of 5 percent; operating margin of 12 percent; return on net assets of 10 percent; and debt-to-capital of 35 percent or less. “Our success over the last few years has been achieved by focusing on operational excellence and by investing capital with greater financial discipline,” says Robert J. Torcolini, chairman, president and chief executive officer. “Our strong financial position will allow us to grow profitably, organically and through acquisitions, while at the same time providing our shareholders with increased cash returns through dividends and share repurchases.” Phelps Dodge, Inco In connection with such termination, Inco has paid Phoenix, Ariz.-based Phelps Dodge $125 million and has agreed to pay Phelps Dodge a further $350 million if it consummates a change-of-control transaction on or prior to Sept. 7, 2007. “When we entered into our combination agreement with Inco for the three-way combination with Falconbridge, we saw a unique opportunity to create the preeminent North American-based miner with leading positions in copper and nickel, and one having enormous synergies. We knew it would be a challenging undertaking to succeed against the various hostile bids for Falconbridge and Inco,” says J. Steven Whisler, chairman and CEO of Phelps Dodge. “When Xstrata increased its all-cash offer for Falconbridge to an amount we could not justify, even with the enormous synergies available in the three-way combination, we declined to support higher bids for Falconbridge.” The failure of either the three-way or two-way mergers is not deterring expansion plans at Phelps Dodge. The company expects to complete an $850 million expansion of its Cerro Verde operation in Peru by the first quarter of 2007; has begun construction of a new, $550 million copper mine near Safford, Ariz.; and expects to begin construction by year-end of a new, $650 million copper mine at Tenke Fungurume in the Democratic Republic of the Congo. The three projects are expected to add approximately 300,000 tons of annual copper production to Phelps Dodge’s operations by 2009. Mittal Still Attempting Mittal must divest either its Weirton plant or one in Sparrows Point, Md., if Dofasco cannot be sold. The decision will be made by the U.S. Department of Justice, which has not informed Mittal of its preference. Kaiser, AMI Metals The new agreement is enabled by a previously announced $105 million expansion at Kaiser Aluminum’s Trentwood, Wash., facility. “Boeing requires the highest-quality materials in the development of their products, and we’re gratified to have been selected as a supplier for some of their most demanding applications,” says Jack A. Hockema, Kaiser chairman, president and CEO. “We are proud of our long-term relationship with Boeing IDS and Kaiser,” adds Scott A. Smith, president of AMI Metals. “AMI Metals, Kaiser Aluminum and Boeing IDS have worked together for the past 16 years on several programs that have resulted in reduced costs, high quality products and on-time delivery, while also utilizing the optimum best value and business practices.” Marubeni-Itochu Steel America Operations Additional name changes will soon follow for MISA’s companies in Canada and Mexico. In Canada, Marubeni-Itochu Steel Canada Inc., has trading offices in Toronto and Vancouver. The Mexico City office is the trading location for Marubeni-Itochu Steel Mexico S.A. de C.V. MISA’s processing capability is focused on its two major market areas, Steel Distribution and Building Products. MISA has 20 plants run by its wholly owned subsidiaries in the United States, plus additional affiliated joint venture operations. Its first processing plant in Mexico, a joint venture, is in the early construction phase with operations to begin in 2007. AZCO Opening Alabama Distribution Center The 130,000-square-foot plant will employ existing rail service, while its proximity to the Warrior River will enable barge shipments. AZCO Steel, is a division of Bushwick Metals, Bridgeport, Conn. Marmon/Keystone Expands Service Center near Montreal The new service center, totaling 60,000 square feet, will allow for all processing to be handled in one location. Four automatic saws will be added to the equipment fleet. “The consolidation of a warehousing facility in nearby Laval into Boucherville will provide improved customer service,” says Jean Leblanc, Quebec regional manager. Briefs The Steel Framing Alliance presented a steel-framed home, a 400-square-foot “Cajun Cottage,” at the Housing Solutions Summit in New Orleans recently. “We are excited to be able to officially introduce steel framing to New Orleans because we believe that it is an important solution to some of the challenges of rebuilding strong, durable homes in the Gulf Coast region,” says Larry Williams, president of the SFA. The American Iron and Steel Institute, a member of the SFA, is behind the effort to promote steel framing as an efficient and cost-competitive alternative to traditional framing materials. The Eupora mill operated by Plymouth Tube Co., Warrenville, Ill., has received the IS/TS 16949:2002 certification. The certification was completed in July and allows Eupora to work more effectively with tier one partners. Eupora produces welded and drawn over mandrel carbon steel tubing for a variety of automotive applications. Northwest Pipe Co., Portland, has been selected to furnish $27 million of large-diameter pipe for the Seymour Capilano tunnel project near Vancouver, B.C. Northwest Pipe will supply approximately 16,000 feet of 120-inch diameter steel pipe directly to the Greater Vancouver Regional District. The pipe will be manufactured in the company’s Adelanto, Calif., and Portland divisions with delivery scheduled to begin in the first quarter of 2008. Stelco, Hamilton, Ont., has scheduled a 22-day maintenance outage at its Hamilton Steel blast furnace beginning Oct. 23. The furnace will be partially refurbished during the outage. Delivery performance to customers is not expected to be affected. The company also announced a six-day outage at its Lake Erie hot mill. Talley Metals, Hartsville, S.C., a subsidiary of Carpenter Technology Corp. announced a change to its surcharge mechanism to increase the nickel premium component to 38 cents per pound. The change went into effect Oct. 1. Universal Stainless and Alloy Products, Bridgeville, Pa., announced base price increases of 3 percent on all air-melted and premium-melted stainless and high-strength, low-alloy grade products. The increase on air-melted products went into effect with new orders placed and shipments scheduled on or after Sept. 11. The increase on premium-melted products will go into effect Jan. 1. People |
|
Questions or comments about Metal Center News. E-mail feedback@metalcenternews.com