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Company achieves over 98% support for senior secured note exchange
offer
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Recent completion of operational consolidations, coupled with
improved capital structure, provides pathway to allow Company to
execute its operating plan and grow
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 had
entered into an agreement with one of its large equity holders and one
of its large public debt holders (the “Agreement”) resulting in
additional support for the Company’s previously-announced, private
exchange offer to certain eligible holders (the “Exchange Offer”)
relating to the exchange of new 12.75% Senior Secured Notes due 2018
(the “New Notes”) for the Company’s outstanding 12.75% Senior Secured
Notes due 2016 (the “Existing Notes”). As a result of the Agreement and
upon completion of the Exchange Offer, $206,302,000 aggregate principal
amount (or 98.24%) of the total $210,000,000 aggregate principal amount
of Existing Notes will be exchanged for New Notes, leaving $3,698,000
aggregate principal amount of the Existing Notes with a maturity of
December 2016.
President and CEO Steve Scheinkman commented, “We are thrilled with the
overwhelming participation in the Exchange Offer. Ten months ago, our
management team set out to both operationally restructure and refinance
A.M. Castle, with an objective to improve the business’ profitability
profile and better position the Company for long-term growth. With
today’s announcement, and the planned future exchange of our convertible
notes, we have developed a clear, near-term path to financial stability,
which we believe will enhance the long-term competitiveness of the
business.”
Scheinkman added, “We have consolidated the operations of the facilities
we targeted in April on time and within budget, which has helped us
reduce our cost structure and drive more accountability down to the
local branch level. To further delever our balance sheet, we recently
announced the decision to sell our Total Plastics, Inc. subsidiary and
certain assets related to our underperforming energy business. We have
made significant progress on both initiatives and expect to accomplish
both in accordance with our planned timelines.”
Scheinkman concluded, “In response to continued challenges in the global
metals market, we have taken additional bold action to reshape the
Company, and as a result, we believe we are well positioned to succeed
in the months and years ahead. While we have maintained our focus on
getting even closer to our customers during this period of transition,
we are excited to now be able to focus our undivided attention to
working with our customers and suppliers to provide supply chain
solutions that address their needs. Our goal is to become even more
responsive to the needs of our customers, all while continuing to
fine-tune our cost structure on a branch-by-branch basis. Most
importantly, with the proper capital structure, we believe that we can
take advantage of opportunities that will be available as market cycles
begin to turn.”
More specifically, the Agreement mentioned above provides that a company
affiliated with W.B. & Co. and FOM Corporation, which together hold in
the aggregate approximately 28% of the Company’s outstanding common
stock and have two representatives serving on the Company’s board of
directors (collectively, the “Significant Equity Holder”), agreed to
purchase approximately $34.7 million aggregate principal amount of
Existing Notes from a significant holder of the Company’s public debt
(the “Significant Debt Holder”). As part of this Agreement, the
Significant Debt Holder has agreed to tender and not withdraw prior to
the expiration of the Exchange Offer the remaining approximately $23.2
million aggregate principal amount of Existing Notes that it holds. In
addition, the Significant Equity Holder has agreed with the Company to
tender and not withdraw prior to the expiration of the Exchange Offer
the Existing Notes being purchased. In consideration of these agreements
to participate in the Exchange Offer, the Company has agreed to pay to
the Significant Equity Holder and the Significant Debt Holder the
consent payment provided for in the Exchange Offer and to reimburse
their reasonable legal fees.
The Company also announced that the early settlement of the Exchange
Offer occurred on February 8, 2016 (the “Early Settlement”). As
previously announced, on February 2, 2016, the Company executed and
delivered a supplemental indenture that gives effect to certain
amendments to the indenture governing the Existing Notes (the “Existing
Indenture”), including elimination of substantially all restrictive
covenants and certain events of default in the Existing Indenture and
release of all the collateral securing the Existing Notes and guarantees
thereof. In connection with the Early Settlement, on February 8, 2016,
(i) the Supplemental Indenture became operative, (ii) the Total Exchange
Consideration (as defined in the confidential offering memorandum and
consent solicitation statement dated January 15, 2016) was paid with
respect to the Existing Notes that were validly tendered in the Exchange
Offer and (iii) an aggregate principal amount of $148,422,000 of the New
Notes were issued pursuant to a new indenture governing the New Notes.
The complete terms and conditions of the Exchange Offer are set forth in
the Confidential Offering Memorandum. The Exchange Offer will expire at
11:59 p.m. New York City time on February 12, 2016, unless extended.
The Exchange Offer is being made, and the New Notes will be issued, only
to holders of Existing Notes that are (i) “qualified institutional
buyers” as that term is defined in Rule 144A under the Securities Act,
or QIBs, in a private transaction in reliance upon an exemption from the
registration requirements of the Securities Act, (ii) institutional
investors which are “accredited investors” as defined in Rule 501(a)(1),
(2), (3), (7) or (8) under the Securities Act or (iii) not a “U.S.
Person” as that term is defined in Rule 902 under the Securities Act, in
offshore transactions in reliance upon Regulation S under the Securities
Act. Documents relating to the Exchange Offer will only be distributed
to holders of outstanding Existing Notes that have returned a
certification letter to us that they are eligible to participate in the
Exchange Offer.
Holders of outstanding Existing Notes who wish to receive a copy of the
eligibility letter for the Exchange Offer may contact D.F. King & Co.,
Inc. toll free at (800) 591-8269, (212) 269-5550 (banks and brokerage
firms), e-mail at cas@dfking.com or
via the following website: www.dfking.com/cas.
The New Notes will be subject to restrictions on transferability and
resale and may not be transferred or resold except in compliance with
the registration requirements of the Securities Act or pursuant to an
exemption therefrom and in compliance with other applicable securities
laws.
This press release is not an offer to sell, nor a solicitation of an
offer to buy, the New Notes in the United States or elsewhere. The New
Notes have not been registered under the Securities Act and may not be
offered or sold in the United States absent registration or an
applicable exemption from the registration requirements of the
Securities Act. The Exchange Offer is made only by, and pursuant to, the
terms set forth in the related offering memorandum and consent
solicitation. The Exchange Offer is not being made to persons in any
jurisdiction in which the making or acceptance thereof would not be in
compliance with the securities, blue sky or other laws of such
jurisdiction.
Finally, on February 8, 2016, the Company announced that it entered into
Amendment No. 3 (“Amendment No. 3”) to its senior credit facility. The
terms of Amendment No. 3 permit (i) the Exchange Offer, (ii) an exchange
offer of new 5.25% Senior Secured Convertible Notes due 2019 for the
Company’s 7.00% Convertible Senior Notes due 2017 (the “New Convertible
Notes”) and (iii) the granting of a third-priority lien to the holders
of such New Convertible Notes. All other material terms of the Company’s
senior credit facility remain unchanged.
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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