CHICAGO Seamless tube and
cold-finished bar producer Optima Specialty Steel Inc. has been
unable to obtain funding for its proposed $112.5-million
acquisition of special bar quality (SBQ) and merchant bar
quality flats producer Kentucky Electric Steel LLC (KES),
putting the deal in jeopardy.
Miami-based Optima is committed
to finding financing, both companies said Monday, adding that
neither party had exercised its right to stop the
"We are disappointed that our
financing efforts have not succeeded as quickly as we had all
hoped, but we continue to pursue various potential financing
options that would enable us to complete this transaction,
which we believe is a great fit for both companies," Optima
chief executive officer Kevin Stevick said in a statement.
If Optima doesnt obtain
financing by Feb. 28, the company must pay KES a termination
fee of $3,375,000, the companies said. In the meantime,
Ashland, Ky.-based ALJ Regional Holdings Inc., KES
parent, still plans to hold a special shareholders meeting on
the deal Dec. 21.
The companies said they
couldnt estimate when the proposed merger might close,
given the uncertainty surrounding financing, as well as other
closing conditions. The companies had expected the deal,
announced in November, to close this month (
amm.com, Nov. 20).
Optima plans to modify KES
facilities to make SBQ rounds, the feedstock needed to produce
SBQ flats as well the seamless tubular products manufactured by
Michigan Seamless Tube LLC and the cold-finished bar products
made by Niagara LaSalle Corp. (
amm.com, Nov. 26), the two companies that were
brought together to form Optima (
amm.com, Dec. 13, 2011).