NEW YORK Global Brass
& Copper Holdings Inc. (GBC) might pursue acquisition
opportunities as it makes a second attempt at an initial public
offering (IPO), according to a regulatory filing by the
GBC is hoping to raise up to
$172.5 million, it said in an amended IPO prospectus filing
with the U.S. Securities and Exchange Commission (SEC).
Thats up from the $150-million figure given in an earlier
filing in 2011 (
amm.com, Oct. 31, 2011).
GBC declined to comment as the
company is in a quiet period. The company owns copper product
producers Olin Brass Corp. and Chase Brass & Copper Co.
LLC, as well as distributor A.J. Oster Group.
Schaumburg, Ill.-based GBC is
now in a position to pursue other opportunities, including
acquisitions, it said.
"The North American copper and
brass distribution industry includes numerous small, regional
players. We believe future industry consolidation and possible
strategic acquisitions in key growth markets, notably Asia,
will provide opportunities to increase our presence in these
markets and to create shareholder value," GBC said. "We may
pursue strategic acquisition and/or partnership opportunities
to increase the breadth and distribution of our product
portfolio and metal distribution services in the future."
GBC expects an uptick in
activity in many of its key end marketsincluding building
and housing, automotive, coinage and industrial machinery, and
equipmentas U.S. macroeconomic conditions continue to
improve, according to the prospectus.
"In the beginning of 2013, the
U.S. housing market has experienced a recovery from the sharp
downturn that began in 2007. We believe that our available
production will allow us to effectively and efficiently respond
to increasing demand," the company said in the S-1 filing.
GBC also plans to focus on a
number of internal initiatives, including an expansion of
existing products and services such as lead-free and low-lead
plumbing products and U.S. dollar coin production, as well as
new growth opportunities such as anti-microbial and renewable
"We expect to see a greater
shift in demand toward low-lead and lead-free copper and brass
products, driven by new government regulation such as the
Reduction of Lead in Drinking Water Act," the company said.
Some of the money raised in the
IPO will be used to pay off debt, which as of Dec. 31 stood at
$389.5 million, GBC said in the documents.
"We are highly leveraged. Based
on the amount of indebtedness outstanding and applicable
interest rates at Dec. 31, our annualized cash interest expense
would be $36.3 million, $700,000 of which represents interest
expense on floating rate obligations and thus is subject to
increase in the event interest rates were to rise," GBC
Still, the company noted that it
has been able to generate cash flow over the past three
yearsin 2012 it shipped 503.2 million pounds of product,
with net sales totaling $1.65 billionwhich has enabled it
to significantly reduce its leverage from roughly 7.9 times
gross debt to 3.4 times as of Dec. 31.
Halkos Holdings LLC, which owns
100 percent of GBC, will act as the selling shareholder while
Goldman Sachs Inc. and Morgan Stanley & Co. LLC are acting
GBC, which intends to list its common stock on the New York
Stock Exchange under the symbol BRSS, operates 11
manufacturing facilities and distribution centers in North
America. The company also holds an 80-percent stake in a
venture in China and half of a joint venture in Japan, and
believes that it is "positioned to take advantage of
(Asias) expanding copper, brass strip and foil