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GBC mulls acquisitions with potential IPO filing

Keywords: Tags  Global Brass & Copper, IPO, Securities and Exchange Commission, SEC, Olin Brass, Chase Copper & Brass, A.J. Oyster, copper brass

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 company.

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). That’s up from the $150-million figure given in an earlier filing in 2011 (, 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 markets—including building and housing, automotive, coinage and industrial machinery, and equipment—as 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 energy applications.

"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 said.

Still, the company noted that it has been able to generate cash flow over the past three years—in 2012 it shipped 503.2 million pounds of product, with net sales totaling $1.65 billion—which 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 as underwriters.

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 (Asia’s) expanding copper, brass strip and foil market."

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