A.M. Castle & Co. Announces Sale of Energy Inventory to Triple-S Tube Supply for Net Cash Proceeds of Approximately $27.5 Mil...
February 22 2016 - 8:00AM
Business Wire
Company Executes Further Step in
Previously-Announced Refinancing Plan, with Net Cash Proceeds
Applied to Delever Balance Sheet
A.M. Castle & Co. (NYSE:CAS) (the “Company” or “Castle”), a
global distributor of specialty metal and plastic products,
value-added services and supply chain solutions, announced today
that it has closed a transaction with Triple-S Tube Supply, LP and
Triple-S Tube Supply ULC (collectively, “Triple-S Tube Supply”) for
the sale of inventory from Castle’s Edmonton and Houston facilities
that primarily service the oil and gas industries. Net cash
proceeds of the transaction are expected to be approximately
$27.5M, with ninety percent (90%) of the gross consideration paid
at closing, and the remainder, subject to certain adjustments,
payable by December 31, 2016. Net proceeds will be used to reduce
borrowings outstanding under the Company’s revolving credit
facility.
President and CEO Steve Scheinkman commented, “Today’s announced
sale of the vast majority of our remaining energy-related
inventory, including material that traces to the Company’s former
Tube Supply acquisition, significantly reduces the Company’s
exposure to oil-related market fluctuations. More importantly, sale
of these assets will provide us with additional liquidity and is a
further step in our recent refinancing activities to delever the
Company’s balance sheet. The transaction serves to streamline our
business as our future operations will be primarily focused on two
key commercial end markets, Aerospace and Industrial. These markets
tend to be more stable over the long-term and we believe our
competitive position is strong and improving in both sectors. We
also remain in active negotiations for the sale of our Total
Plastics subsidiary, which will help to further delever our balance
sheet. We are committed to completing our operating and financial
restructuring activities in the near-term, and believe in our
long-term opportunity to grow our Aerospace and Industrial
business.”
Pat Anderson, Executive Vice President & Chief Financial
Officer added, “In addition to these sales, we expect to generate
further proceeds from the sale of equipment related to the
facilities. Following the completion of the transfer of these
energy-related assets to Triple-S Tube Supply, we will officially
close our Houston and Edmonton facilities. We believe that the
savings associated with the closing of these facilities will
improve our ability to generate cash from operations, which we
intend to reinvest in the business to better position the Company
for long-term success.”
As a part of the transaction, Triple-S Tube Supply will also
purchase the trade name rights to the Tube Supply brand. Castle
will assist Triple-S Tube Supply in the transferring of the
inventory from the facilities scheduled to be completed by December
31, 2016. Triple-S Tube Supply will provide its own sales staff and
administrative support. A.M. Castle will transfer some of its
employees from the Houston and Edmonton facilities to other Company
locations, and other employees will be encouraged to join Triple-S
Tube Supply.
The Company is currently evaluating the accounting implications
of the transactions, which is expected to result in certain charges
and/or write-downs of assets associated with the sale of inventory
and closing of these locations.
About A. M. Castle & Co.
Founded in 1890, A. M. Castle & Co. is a global distributor
of specialty metal and plastic products and supply chain services,
principally serving the producer durable equipment, oil and gas,
commercial aircraft, heavy equipment, industrial goods,
construction equipment, retail, marine and automotive sectors of
the global economy. Its customer base includes many Fortune 500
companies as well as thousands of medium and smaller-sized firms
spread across a variety of industries. Within its metals business,
it specializes in the distribution of alloy and stainless steels;
nickel alloys; aluminum and carbon. Through its wholly-owned
subsidiary, Total Plastics, Inc., the Company also distributes a
broad range of value-added industrial plastics. Together, Castle
and its affiliated companies operate out of 42 service centers
located throughout North America, Europe and Asia. Its common stock
is traded on the New York Stock Exchange under the ticker symbol
“CAS”.
Cautionary Statements Regarding Forward-Looking
Information
Information provided and statements contained in this release
that are not purely historical are forward-looking statements
within the meaning of Section 27A of the Securities Act, Section
21E of the Securities Exchange Act of 1934, as amended (“Exchange
Act”), and the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements only speak as of the date of this
release and the Company assumes no obligation to update the
information included in this release. Such forward-looking
statements include information concerning our possible or assumed
future results of operations, including descriptions of our
business strategy, and the cost savings and other benefits that we
expect to achieve from our facility closures and organizational
changes. These statements often include words such as “believe,”
“expect,” “anticipate,” “intend,” “predict,” “plan,” “should,” or
similar expressions. These statements are not guarantees of
performance or results, and they involve risks, uncertainties, and
assumptions. Although we believe that these forward-looking
statements are based on reasonable assumptions, there are many
factors that could affect our actual financial results or results
of operations and could cause actual results to differ materially
from those in the forward-looking statements, including our ability
to effectively manage our operational initiatives and restructuring
activities, the impact of volatility of metals and plastics prices,
the cyclical and seasonal aspects of our business, our ability to
effectively manage inventory levels, our ability to successfully
complete our strategic refinancing process, and the impact of our
substantial level of indebtedness, as well as including those risk
factors identified in Item 1A “Risk Factors” of our Annual Report
on Form 10-K for the fiscal year ended December 31, 2014. All
future written and oral forward-looking statements by us or persons
acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to above. Except as
required by the federal securities laws, we do not have any
obligations or intention to release publicly any revisions to any
forward-looking statements to reflect events or circumstances in
the future, to reflect the occurrence of unanticipated events or
for any other reason.
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ALPHA IRAnalyst ContactChris Hodges or Nick Hughes(312)
445-2870Email: CAS@alpha-ir.com