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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