Dec. 11, 2006 — The Timken Co. announced Friday that it has completed the sale of its Latrobe Steel subsidiary in Latrobe, Pa., to a group of investors led by the Watermill Group, Hicks Holdings and Sankaty Advisors for approximately $215 million in cash.

As a result of the transaction, Latrobe Steel will become a private stand-alone company with plans to grow and continue operations at all of its business locations. The company will operate under the new name of Latrobe Specialty Steel Co., to reflect the unique nature of its products and services.

A leading global producer and distributor of high-quality, vacuum remelted specialty steels and alloys, Latrobe Steel produces and distributes more than 300 grades of specialty steels for use in aerospace applications, high-performance cutting tools, aluminum casting dies, extrusion and thread roll dies and other demanding applications.

"Latrobe Specialty Steel is a global market leader in niche specialty steel segments and a profitable company. The current demand for aerospace and military specialty steels is strong. We expect that demand to continue into the next decade," said Hans J. Sack, President of Latrobe Specialty Steel. Latrobe is the foremost U.S. producer of iron-based vacuum remelted steels and an elite North American producer and distributor of high speed and tool steels.

The company says it plans to continue operations in Latrobe, Pa. "Latrobe Specialty Steel has a large, up-to-date investment in the city of Latrobe,” says Sack. “Latrobe Specialty Steel's biggest investment is in the company's people. The vast majority of our colleagues are in Latrobe, Pa. This is a tested team. Employee retention is high. Latrobe Specialty Steel invested more than $30 million in modernization in just the last four years. The company will remain and prosper here."

Steven E. Karol, Founder and Managing Partner of the Watermill Group remarked, "Watermill is excited by this latest investment. We have a long history of buying and helping businesses improve. Latrobe Specialty Steel is attractive to us due to its excellent position in growing and profitable markets and an outstanding management team. Latrobe has manufacturing and distribution facilities that are up to date, well maintained and which will support the company's continued growth. We're excited about the future of Latrobe Specialty Steel, and look forward to partnering with Hicks, Sankaty and local management in this endeavor."

Headquartered in Latrobe, Pa., Latrobe Specialty Steel is a leading global producer and distributor of high quality specialty steels and alloys. Latrobe Specialty Steel offers a comprehensive line of high-speed steels, tool and die steels, and high strength aerospace-related specialty steels and alloys for technical niche applications. Through its two primary business units—Latrobe Specialty Steel Manufacturing and Latrobe Specialty Steel Distribution—the company produces and distributes over 300 grades of specialty steels for use in aerospace applications, high-performance cutting tools, aluminum casting dies, extrusion and thread roll dies and other demanding applications. In business continuously since 1913, Latrobe Specialty Steel employs 840 coworkers in ten locations.

The Watermill Group is a private strategic investment firm that focuses on acquiring middle-market companies in which it can add value through strategic and operational guidance as well investment capital. By leveraging 28 years of strategic, transactional and operating experience, Watermill helps its portfolio management teams thrive, to generate extraordinary returns for all stakeholders. Its principals have extensive expertise in manufacturing and value-added distribution, and differentiated services industries.

Founded and chaired by Thomas O. Hicks, Hicks Holdings LLC is a Dallas-based private investment firm that makes corporate acquisitions as well as owns and manages assets in sports and real estate. Hicks Holdings has a time tested team and strategy. The senior team has an average tenure of 12-1/2 years working with Mr. Hicks. The firm's strategy is based on the "buy & build" concept pioneered by Tom Hicks in the mid-1980's. Notable examples of the buy & build strategy include Dr Pepper/7-Up, International Home Foods and Chancellor/Clear Channel.

Sankaty Advisors, LLC, the credit affiliate of Bain Capital, LLC, is one of the nation's leading private managers of high yield debt obligations. With approximately $13 billion in assets, Sankaty invests in a wide variety of securities, including leveraged loans, high-yield bonds, stressed debt, distressed debt, mezzanine debt, structured products and equity investments. Through a variety of funds, Sankaty Advisors has the ability to invest in a company's capital structure at every level from secured debt to equity, and can also provide capital to growing companies with unique financing needs.

Timken supplies highly engineered bearings, alloy steels and related products and services from its operations in 27 countries. With 27,000 employees, Timken reported sales of $5.2 billion in 2005.