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Reliance Steel & Aluminum Completes PNA Acquisition
08/05/2008 - Reliance Steel & Aluminum completes its acquisition of the outstanding capital stock of PNA Group Holding Corp., raises $500 million in a new unsecured term loan, and settles cash tender offers for PNA’s Senior Notes.
Reliance Steel & Aluminum Co. has completed its acquisition of the outstanding capital stock of PNA Group Holding Corp., a national steel service center group.
With a value of approximately $1.065 billion, the transaction included the repayment or refinancing of approximately $725 million of PNA’s debt, including the settlement of Reliance’s cash tender offers for 100% of PNA’s outstanding notes. Reliance funded the purchase of PNA with proceeds from its new $500-million senior unsecured term loan and borrowings under Reliance’s existing $1.1-billion credit facility.
Through its subsidiaries, PNA processes and distributes primarily carbon steel plate, bar, structural and flat-rolled products. Subsidiaries include the operating entities Delta Steel, LP, Feralloy Corp., Infra-Metals Co., Metals Supply Co., Ltd., Precision Flamecutting and Steel, LP, and Sugar Steel Corp. PNA also operates 23 steel service centers throughout the United States, as well as five joint ventures with seven additional service centers in the United States and Mexico. For the six months ended June 30, 2008, the company reported revenues of about $1.1 billion.
“We are very pleased to have completed this acquisition,” said David H. Hannah, Chairman and CEO. “PNA is a strong fit for Reliance’s continued growth strategy as it complements our existing business, adds new products in new areas, and enhances our product, geographic and customer diversification which have been key factors in our success. We also continue to have a solid balance sheet with a pro-forma net debt-to-total capital ratio of about 50% and availability under our $1.1 billion credit facility of about $200 million. Our weighted average borrowing cost for the financing of the PNA acquisition is approximately 4.0%.”
Reliance also entered into a new $500-million senior unsecured term loan on July 31, 2008. Proceeds were used to fund the purchase of PNA, including the repayment of PNA’s debt. Banc of America Securities LLC was the sole lead arranger of the term loan.
Reliance also announced that it had settled its cash tender offers to purchase any and all of the outstanding PNA Group, Inc. 10.75% Senior Notes due 2016 and any and all of the outstanding PNA Intermediate Holding Corp. Senior Floating Rate Toggle Notes due 2013. The tender offers expired on August 1, 2008. Reliance accepted for payment all Notes validly tendered and not withdrawn pursuant to the tender offers. All of the $250 million aggregate outstanding principal amount of Fixed Rate Notes and all of the $170 million aggregate outstanding principal amount of Floating Rate Notes were validly tendered and not withdrawn pursuant to the tender offers.
The total amount paid to settle the purchase of the Notes, including the consent payments and accrued and unpaid interest, was $489.9 million. Citi was the sole Dealer Manager for the tender offers and consent solicitations. Global Bondholder Services Corporation was the Information Agent and the Depositary for the tender offers and the consent solicitations.
Headquartered in Los Angeles, Calif., Reliance Steel & Aluminum is the largest metals service center company in North America. Through a network of more than 200 locations in 38 states and Belgium, Canada, China, Mexico, South Korea and the United Kingdom, the company provides value-added metals processing services and distributes a full line of over 100,000 metal products to more than 125,000 customers in a broad range of industries.
