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EMJ Announces Financial Restructuring

Jan. 15, 2004 — The Earle M. Jorgensen Co. has reached an agreement with Earle M. Jorgensen Holding Co., Inc. (“Holding”), the parent company of EMJ, and Holding's principal security holders providing for a restructuring of the combined company's capital structure.

Earle M. Jorgensen Co.’s financial restructuring is being achieved pursuant to an Agreement and Plan of Merger and Reorganization dated as of December 18, 2003 among EMJ, Holding and EMJ Metals LLC, a newly-formed wholly-owned subsidiary of EMJ. The restructuring is also pursuant to an Exchange Agreement among Holding, EMJ and Kelso Investment Associates IV, L.P. and certain of its affiliates ("Kelso"). The principal effect of the financial restructuring will be to convert all outstanding debt and equity securities of Holding to common stock of EMJ. Kelso is the holder of Holding's outstanding Series A Variable Rate Notes and also is Holding's controlling stockholder.

The company states that the transaction would not affect day-to-day operations, and that customers, suppliers and employees will continue to deal with the Earle M. Jorgensen Company. As a result of the merger and financial restructuring:

• All of Holding's outstanding Series A Variable Rate Notes in principal amount of $222.2 million would be exchanged for 40,691,173 newly-issued shares of EMJ's common stock;
• Each outstanding share of Holding's Series B Preferred Stock would convert into 188.271 newly-issued shares of EMJ's common stock;
• Each outstanding share of Holding's Series A Preferred Stock would convert into 124.840 newly-issued shares of EMJ's common stock; and
• Each outstanding share of Holding's common stock would convert into one newly-issued share of EMJ's common stock.

In addition, as part of the merger and financial restructuring, an aggregate of approximately 2,932,534 shares of EMJ's common stock would be issued in exchange for outstanding warrants to purchase Holding's common stock. Options to purchase approximately 2,101,000 shares of Holding's common stock (as of November 30, 2003) and any subsequently issued options would be assumed by EMJ and exercisable for EMJ's common stock. In connection with the merger, EMJ's board also authorized a new stock incentive plan providing for options to purchase up to 5,000,000 shares of EMJ common stock. Following the merger and financial restructuring, EMJ will have approximately 68,260,676 shares of its common stock outstanding, not including shares to be issuable upon exercise of options. EMJ filed a registration statement with the Securities and Exchange Commission yesterday relating to the shares of EMJ's common stock proposed to be issued in the restructuring.

Maurice S. Nelson Jr., EMJ's President and CEO, stated, "We believe the merger and financial restructuring will be a great development for EMJ and its stockholders. By converting all of our Holding company debt and preferred stock into common stock, we believe the transaction will allow us to build value for our stockholders and focus on growing our business. The transaction will also allow us to provide more meaningful equity incentives to our employees through our stock bonus plan and our stock incentive plan."

Consummation of the merger and the financial restructuring is subject to various customary conditions, including the approval of various classes of Holding's stockholders by a majority of the stockholders of such classes other than Kelso and the consent of Holding's lenders. EMJ anticipates that a meeting of Holding's stockholders will be held to address the merger late in the first calendar quarter of 2004. There is no assurance that the proposed merger will be approved by the requisite votes of Holding's stockholders or that the other conditions to completion of the transaction will be satisfied. Thus there can be no assurance that the merger will be consummated.

EMJ, with headquarters in Lynwood, Calif., is one of the largest independent distributors of metal products in North America with 36 service and processing centers. EMJ inventories more than 25,000 different bar, tubing, plate, and various other metal products, specializing in cold finished carbon and alloy bars, mechanical tubing, stainless bars and shapes, aluminum bars, shapes and tubes, and hot-rolled carbon and alloy bars.

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