CHICAGO Seamless tube and
cold-finished bar producer Optima Specialty Steel Inc. has
inked a deal to acquire special bar quality (SBQ) and merchant
bar quality steel producer Kentucky Electric Steel LLC (KES)
for $112.5 million in cash, according to KES parent ALJ
Regional Holdings Inc.
The deal will leave the company
with $51 million in cash on hand following the repayment of
debt, transaction-related expenses and other costs, Ashland,
Ky.-based ALJ said Monday.
The merger agreementwhich
remains subject to shareholder and regulatory approval, as well
as the arrangement of financing by Miami-based Optimais
expected to close in December, the companies said separately
Monday. The deal could be terminated if Optima doesnt
obtain financing or if it isnt consummated by Feb. 28,
The deal was unanimously
approved by ALJs board, it said, noting that it could
seek to use the proceeds of the sale to fund an acquisition.
However, no specific targets have been chosen. The company said
it would have no operations and no material assets, other than
cash from the transaction, following the closing.
According to the deal, Optima
will recognize the terms of a labor contract negotiated on May
4, 2008, between KES and the United Steelworkers union, ALJ
"It has been extremely
gratifying to have taken a mill that was closed, reopen it and
make it into a world-class provider of SBQ and (merchant bar
quality) steel products," ALJ chief executive officer John
Scheel said in a statement.
KES, which has been a supplier
to Optima, should complement the companys portfolio,
Optima said. Late last year, Optima acquired Hammond,
Ind.-based cold-finished bar producer Niagara LaSalle Corp.,
merging it with its South Lyon, Mich.-based Michigan Seamless
Tube LLC unit (
amm.com, Dec. 13).
"KES fits perfectly into Optima
Specialty Steels long-term strategy of building a leading
specialty steel producer that delivers the best steel products
to our customers," Optima president and chief executive officer
Kevin Stevick said in a statement.
Optima parent Optima
Acquisitions LLC has holdings in steel, ferroalloys, mining,
real estate and other industries. Its holdings also include
Warren Steel Holdings LLC, Steel Rolling Holdings Inc., CC
Metals & Alloys LLC, Felman Production Inc. and Felman
Trading Inc., the company said.