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ALJ Announces 2011 Revenues; Refinancing and Expansion of Senior Financing
10/07/2011 - ALJ Regional Holdings, the parent company of Kentucky Electric Steel, reported revenues of $45.9 million for the fourth quarter and revenues of $162.1 million for the 2011 fiscal year. The company also announced the refinancing and increase of the senior financing agreement of Kentucky Electric Steel.
ALJ Regional Holdings, the parent company of Kentucky Electric Steel, reported revenues of $45.9 million for the fourth quarter and revenues of $162.1 million for the 2011 fiscal year, which ended September 30, 2011.
The $45.9 million revenues for the fourth quarter compare to revenue of $32.4 million for the year-ago fourth quarter. The $162.1 million annual revenues compare to revenues of $112.8 million for the fiscal year ended September 30, 2010.
“The revenue improvement for the fiscal year was the culmination of improved quarterly demand,” said John Scheel, ALJ's Chief Executive Officer. “Overall, shipments were up about 21% and selling prices were up about 18%.”
In a separate release, the company also announced the refinancing and increase of the senior financing agreement of its operating subsidiary KES Acquisition Company, which does business as Kentucky Electric Steel.
Kentucky Electric Steel KES entered into an amended and restated revolving credit, term loan and security agreement on September 30 with PNC Bank, National Association, as a lender and as agent for the lenders. The Loan Agreement provides for an asset-based revolving credit line of $30 million and a term loan of $6 million, which is an increase from KES’s prior credit line of $23 million and term loan of $4 million.
The Term Loan is repaid in equal principal payments of $500,000 per quarter over twelve quarters plus certain mandatory prepayments. The revolver and credit line, which expire on September 30, 2014, contain customary covenants and an event of default if ALJ Board Chairman Jess Ravich is no longer on the Board of Directors of ALJ.
Jess Ravich, individually and together with two related trusts, collectively guaranteed up to $6.0 million of the Term Loan, in exchange for payment of a guaranty fee by KES. Terms of the guaranty and guaranty fee were approved by the independent members of each of the ALJJ and KES Boards of Directors.
Certain proceeds of the Loan Agreement were used by KES to redeem approximately $9.1 million of principal plus approximately $2.9 million of accrued but unpaid interest on its Subordinated Loans issued under the Subordinated Financing Agreement for an aggregate consideration of $11.7 million in cash. There is now approximately $16.5 million of remaining principal plus approximately $5.2 million of remaining accrued but unpaid interest outstanding on such Subordinated Loans. Portions of the redeemed Subordinated Loans were held by certain affiliated parties of KES and ALJ.
In a related transaction on September 30, 2011, KES repurchased 2,928 shares of its Series B Common Stock for an aggregate consideration of $36,599 (approximately $12.50 per share). There are now 13,063 shares of Series B Common Stock outstanding. Each of these transactions was approved by independent directors of ALJ and KES.
These transactions are expected to generate future cash savings for KES in an aggregate amount of about $500,000.
ALJ is the parent company of KES Acquisition Co., which does business as Kentucky Electric Steel, the owner and operator of a steel minimill near Ashland, Ky., producing both merchant bar quality flats (MBQ Bar Flats), and special bar quality steel flats (SBQ Bar Flats).
