Birmingham Steel Signs Letter of Intent to Sell Substantially All Assets to Nucor; Reports Third Quarter Results.Business Editors BIRMINGHAM Birmingham, cities, United States Birmingham (bûr`mĭnghăm') 1 City (1990 pop. 265,968), seat of Jefferson co., N central Ala., in the Jones Valley near the southern end of the Appalachian system; founded and inc. , Ala ALA aminolevulinic acid. Ala alanine. ala (a´lah) pl. a´lae [L.] a winglike process. .--(BUSINESS WIRE)--May 21, 2002 Birmingham Steel Corporation (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). BB:BIRS BIRS Banff International Research Station (Canada) BIRS Banca Internazionale per la Ricostruzione e lo Sviluppo (Italian) BIRS Basic Indexing and Retrieval System BIRS Battlefield Information Reporting System ) today said the Company is in exclusive discussions with Nucor Corporation (NYSE NYSE See: New York Stock Exchange :NUE NUE Nitrogen Use Efficiency NUE Nuremberg, Germany - Nuremberg (Airport Code) NUE Non-Upset Ends (piping) ) regarding the sale of substantially all its assets for $615 million in cash. Yesterday, the Company filed its Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2002, and disclosed it has signed a non-binding letter of intent with Nucor, which is conditioned upon finalizing definitive documentation and related agreements in support of the transaction with the Company's senior secured lenders. Birmingham Steel said the Company expects to finalize fi·nal·ize tr.v. fi·nal·ized, fi·nal·iz·ing, fi·nal·iz·es To put into final form; complete or conclude: "They have jointly agreed ... discussions and definitive documentation with its lenders and Nucor prior to May 31, 2002. However, the Company said that it could not give assurance that acceptable definitive agreements can be completed with Nucor or the Company's secured lenders on a timely basis. The $615 million purchase price is less than the full amount of the Company's secured debt, and the agreements between the parties would require the transaction be effected pursuant to a pre-arranged Chapter 11 filing approved by a bankruptcy court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. in Delaware Delaware, state, United States Delaware (dĕl`əwâr, –wər), one of the Middle Atlantic states of the United States, the country's second smallest state (after Rhode Island). . The Company and its secured lenders are currently negotiating a pre-arranged plan agreement which, subject to the approval of the bankruptcy court, would provide that secured lenders distribute a portion of the proceeds from the transaction to unsecured creditors Unsecured Creditor An individual or institution that lends money without obtaining specified assets as collateral. This poses a higher risk to the creditor because they have nothing to fall back on should the borrower default on the loan. A debenture holder is an unsecured creditor. and shareholders. The agreements under negotiation contemplate payments to Birmingham Steel shareholders of approximately $0.47 per share. The agreements contemplated by the Company, its secured lenders and Nucor would also provide for full and uninterrupted payments to the Company's critical suppliers through the anticipated closing date of the transaction. On or before May 31, 2002, the Company expects to have completed the agreements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the proposed transaction with Nucor or to have identified an alternative course of action. The Company said other possible courses of action include, but are not necessarily limited to, seeking protection under a Chapter 11 filing, extending the CIBC CIBC Canadian Imperial Bank of Commerce CIBC Centres Interinstitutionnels de Bilan de Compétences CIBC Commonwealth Institute of Biological Control (Trinidad) CIBC Commercial International Brokerage Company engagement to determine other strategic alternatives, re-engaging in discussions with other potential purchasers, seeking extensions of the maturity dates of debt due on May 31, or seeking a restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of its debt with current lenders. John Correnti, Chairman and Chief Executive Officer of Birmingham Steel, commented, "During the past two years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time employees and management of Birmingham Steel have taken the actions necessary to improve the Company's overall financial position. This turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. has been achieved during the most challenging and depressed economic conditions ever experienced by the steel industry." Correnti continued, "Although substantial progress to improve the Company's overall financial condition has been made during the past two years, the Company continues to be challenged by excessive debt levels created by the failed strategies of prior management. Nucor is a profitable and financially solid organization, and we believe the proposed transaction provides the best value for our stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. , which include lenders, shareholders, customers, suppliers and employees. We believe the Birmingham Steel operations and workforce would be tremendous additions to Nucor." Birmingham Steel Corporation also reported financial results for the fiscal 2002 third quarter and nine months ended March 31, 2002. For the three months ended March 31, 2002, the Company reported a net loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $9,192,000 ($0.29 per share), compared with a loss of $4,431,000 ($0.14 per share) in the third quarter of the prior fiscal year. Reflecting economic uncertainty that persisted throughout the third quarter, steel shipments were 465,000 tons, down from 518,000 tons in the same period last year. The average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. per ton in the current quarter was $253, down from $260 last year. Despite the decline in volume and selling price, gross profit as a percentage of sales improved to 9.6% in the current quarter from 8.6% in the prior-year quarter as a result of cost reductions and improved operating efficiencies. Also, interest expense attributable to continuing operations increased $5.8 million in the current quarter as a result of the sale of the Cartersville and Cleveland facilities and the related reduction in interest expense previously allocated to discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . For the nine months ended March 31, 2002, the Company reported a net loss from continuing operations of $11,186,000 ($0.36 per share), compared with a loss of $9,312,000 ($0.30) in the same period last year. Steel shipments in the current fiscal year were 1,380,000 tons, compared with 1,587,000 tons last year. Correnti commented, "Pricing pressures, seasonal factors and general skepticism skepticism (skĕp`tĭsĭzəm) [Gr.,=to reflect], philosophic position holding that the possibility of knowledge is limited either because of the limitations of the mind or because of the inaccessibility of its object. about the U.S. economy resulted in reduced shipments and lower revenues in January and February. However, favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. trade rulings by the International Trade Commission, support by the Bush Administration for enforcement of anti-dumping laws anti-dumping law Health law Any legislation enacted to prevent the inappropriate transfer of Pts who are medically unstable–eg, in early labor, or with impending rupture of aortic aneurysm, to other health care facilities. See Dumping. , and indications of general economic recovery resulted in improved margins and operating performance in March. Rebar price increases announced in March began taking effect in April, and additional price increases were announced in April and May for rebar and merchant products. Also, shipments in March increased significantly as the Company entered the seasonally strong construction season." Correnti continued, "During the third quarter, the Company completed the sale of the idled American Steel & Wire special bar quality (SBQ SBQ Sociedade Brasileira de Quimica (Portugese) SBQ Special Bar Quality ) facility in Cleveland, Ohio "Cleveland" redirects here. For the Cleveland metropolitan area, see . For other uses, see Cleveland (disambiguation). Cleveland is a city in the U.S. state of Ohio and the county seat of Cuyahoga County, the most populous county in the state. . The sale of the Cleveland plant enabled the Company to reduce debt by $21 million and eliminated approximately $500,000 per month in carrying costs Carrying costs Costs that increase with increases in the level of investment in current assets. . With the sale of Cleveland, the Company returned to the proven and profitable platform of its four core operating facilities." Correnti said the Company continues to maintain sufficient liquidity under its revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility and remains in compliance with all covenants pursuant to its loan agreements. On May 14, 2002, the Company announced that its lenders had extended the deadline for payment of certain debt previously scheduled to mature on May 15, 2002. At that time, the Company also said it was finalizing the review of its financial and strategic alternatives with its lenders and investment advisors Investment Advisor 1. A person making investment recommendations in return for a flat fee or percentage of assets managed, known as a commission. 2. For mutual fund companies, it is the individual who has the day-to-day responsibility of investing and monitoring the cash and , CIBC World Markets CIBC World Markets is the investment banking division of the Canadian Imperial Bank of Commerce. It helps governments, large companies, and other large institutions obtain capital and credit and is a primary dealer in U.S. Treasury securities. Corp. The Company further stated it expected to report the results of its evaluation process on or before May 31, 2002. Birmingham Steel operates in the mini-mill sector of the steel industry and conducts operations at facilities located across the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The common stock of Birmingham Steel is traded on the over the counter bulletin board under the symbol "BIRS." Except for historical information, the matters described in the press release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including economic conditions, market demand factors, equipment breakdowns or failures, the Company's continued compliance with its financing arrangements and its principal debt agreements, as well as other risks described from time to time in the Company's periodic and special filings with the Securities and Exchange Commission. Any forward-looking statements contained in this document speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" , and the Company disclaims any intent or obligation to update such forward-looking statements.
BIRMINGHAM STEEL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31, June 30,
2002 2001
--------- ---------
(Unaudited) (Restated)
ASSETS
Current assets:
Cash and cash equivalents $ 935 $ 935
Accounts receivable, net of allowance for
doubtful accounts of $1,824 at March 31,
2002 and $2,146 at June 30, 2001 52,844 58,261
Inventories 69,467 71,708
Other current assets 4,057 2,986
Net current assets of discontinued
operations 4,959 71,979
--------- ---------
Total current assets 132,262 205,869
--------- ---------
Property, plant and equipment:
Land and buildings 111,838 111,773
Machinery and equipment 385,454 384,411
Construction in progress 11,101 12,369
--------- ---------
508,393 508,553
Less accumulated depreciation (278,274) (256,807)
--------- ---------
Net property, plant and equipment 230,119 251,746
Excess of cost over net assets acquired 6,211 13,515
Other 17,108 16,957
Net non-current assets of discontinued
operations 78,711 213,258
--------- ---------
Total assets $ 464,411 $ 701,345
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 27,832 $ 37,692
Accrued interest payable 7,459 3,365
Accrued payroll expenses 5,161 4,884
Accrued operating expenses 7,872 8,568
Other current liabilities 15,723 17,484
Current maturities of long-term debt 383,844 293,500
Current liabilities of discontinued
operations 4,826 25,312
Reserve for operating losses of
discontinued operations 3,313 10,136
--------- ---------
Total current liabilities 456,030 400,941
Deferred liabilities 7,932 7,701
Long-term debt, less current portion 158,500 254,000
Non-current liabilities of discontinued
operations 30,324 45,207
Stockholders' equity:
Preferred stock, par value $.01;
authorized: 5,000,000 shares -- --
Common stock, par value $.01; authorized:
75,000,000 shares; issued:
31,614,531 March 31, 2002 and
31,142,113 at June 30, 2001 316 311
Additional paid-in capital 344,236 343,908
Unearned compensation (142) (317)
Accumulated deficiency (532,785) (350,406)
--------- ---------
Total stockholders' deficit (188,375) (6,504)
--------- ---------
Total liabilities and stockholders'
equity $ 464,411 $ 701,345
========= =========
BIRMINGHAM STEEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data; unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------- ----------------------
2002 2001 2002 2001
--------- --------- --------- ---------
(Restated) (Restated)
Net sales $ 123,509 $ 144,831 $ 376,669 $ 452,128
Cost of sales:
Other than
depreciation
and amortization 104,392 123,732 308,216 386,143
Depreciation and
amortization 7,234 8,592 22,735 25,970
--------- --------- --------- ---------
Gross profit 11,883 12,507 45,718 40,015
Selling, general and
administrative
expense 8,463 8,154 24,357 24,266
Operating income 3,420 4,353 21,361 15,749
Interest expense,
including
amortization
of debt issue
costs 12,777 8,866 33,050 25,623
Other income, net 192 106 359 716
--------- --------- --------- ---------
Loss from continuing
operations before
income taxes (9,165) (4,407) (11,330) (9,158)
Provision for
(benefit from)
income taxes 27 24 (144) 154
--------- --------- --------- ---------
Net loss from
continuing
operations (9,192) (4,431) (11,186) (9,312)
Discontinued operations:
Current operating
losses from
discontinued
operations (634) (18,804) (26,949) (70,512)
Recovery (loss) on
disposal of
Cartersville
assets 202 -- (142,391) --
Loss/reserve for
loss on disposal
of SBQ assets (1,854) -- (1,854) (77,600)
--------- --------- --------- ---------
Net loss from
discontinued
operations (2,286) (18,804) (171,194) (148,112)
Net loss $ (11,478) $ (23,235) $(182,380) $(157,424)
========= ========= ========= =========
Weighted average
shares
outstanding 31,491 31,032 31,327 30,970
========= ========= ========= =========
Basic and diluted per share amounts:
Loss from
continuing
operations $ (0.29) $ (0.14) $ (0.36) $ (0.30)
Loss from
discontinued
operations (0.07) (0.61) (5.46) (4.78)
--------- --------- --------- ---------
Net loss per
share $ (0.36) $ (0.75) $ (5.82) $ (5.08)
========= ========= ========= =========
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