Lakeside Announces Capital Expansion Plans, Renewal of Credit Facility
02/10/2010 - Lakeside Steel Inc.’s Board of Directors has recently approved a significant capital investment for the fiscal year ending March 31, 2011. Capital expansion plans include the construction of new facilities at the Welland, Ont., location of its wholly owned subsidiary, Lakeside Steel Corp.
Lakeside Steel Inc.’s Board of Directors has recently approved a significant capital investment for the fiscal year ending March 31, 2011. The capital expansion plans include the construction of new facilities at the Welland, Ont., location of its wholly owned subsidiary, Lakeside Steel Corp.
Lakeside will install a casing threading line to perform work that Lakeside currently outsources in Texas, Albert, and Ontario. Once operational, Lakeside will be able to end finish all products produced in its Welland facility. The company believes that this process will move Lakeside up the value chain, improve customer lead times, and have a positive impact on its margins.
Lakeside also plans to engage an outside consulting firm to review the feasibility of the installation of a new slitting line to process the hot band steel used as raw material at its Welland operations. The company currently contracts 100% of its slitting business to three Ontario-based processors. Lakeside anticipates that the installation of an in-house slitting line would improve margins, reduce costs, and provide improved flexibility in raw steel purchasing.
When fully operational, the new operations are expected to create up to 40 additional jobs. The capital expansion plans contemplate expenditures of approximately $5 million. Construction of the new facilities is expected to begin in August 2010.
Once completed, the new facilities, in conjunction with Lakeside's recently completed upsetting and threading line and rail yard, will improve the company's upstream and downstream integration.
"The capital expansion plans are another step in pursuit of opportunities to grow our business responsibly,” said Ron Bedard, President and CEO of Lakeside. “We have an excellent work force and believe that our employees will do a very good job in these new facilities. In addition, we expect the new operations to have a positive impact on working capital, efficiency, margins, and customer service."
Lakeside Steel also has recently renewed its credit facility with CIT Business Credit Canada Inc.
"Lakeside has a long standing and excellent relationship with CIT and appreciates their support and confidence in Lakeside through the economic downturn,” said Ken Hunter, Chief Financial Officer. “We believe that the worst is behind us and that we have turned a corner. While the economic recovery will be long and slow, we believe Lakeside is in a good position to return to profitability."
Lakeside Steel is a 2010 TSX Venture Exchange 50 company and the parent company of Lakeside. Lakeside, located in Welland, Ont., is a diversified steel pipe and tubing manufacturer. Its customers include large oil and gas, mining, automotive, and commercial and industrial supply companies. The company also manufactures pipe and mechanical tubing for the resale market, which is sold to distributors in Eastern Canada and the Northeastern United States. It manufactures a variety of products for these industries including oil well tubing and casing, mechanical tubing, pressure tubing, automotive tubing, hollows for redraw, line pipe, heating and plumbing pipe, drill rod, and specialty tubing.
