Item 2.01
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Completion of Acquisition or Disposition of Assets.
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On July 2, 2018, Joseph T.
Ryerson & Son, Inc. (
JTR
), a Delaware corporation and wholly owned subsidiary of Ryerson Holding Corporation (
Ryerson
), completed the acquisition of Central Steel and Wire Company, a
Delaware corporation (
Central Steel
), pursuant to the terms of the previously disclosed Agreement and Plan of Merger (the
Merger Agreement
), dated as of June 4, 2018, by and among JTR, Hunter
MergerCo, Inc., a Delaware corporation and wholly-owned subsidiary of JTR (
Merger Sub
), Central Steel, and Fortis Advisors LLC, a Delaware limited liability company, solely in its capacity as the representative of Central
Steels stockholders thereunder. Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Central Steel (the
Merger
), with Central Steel surviving the Merger and continuing as a wholly-owned
subsidiary of JTR.
Central Steel is a leading metal service center with locations across the Central and Eastern United States. Central
Steel employs approximately 900 people and operates out of six locations offering custom solutions utilizing value-added processing and a full line of metal products.
The holders of common stock, par value $5.00 per share (the
Common Stock
), of Central Steel as of the closing of the
Merger will receive aggregate Merger consideration of approximately $150.8 million, or approximately $616.32 per share, in cash from Ryerson in connection with the closing of the Merger. In addition, shareholders of Central Steel as of the
closing of the Merger may receive up to $7.5 million in the aggregate of additional consideration, which is representative of the amount held back in the transaction pending the final determination of Central Steels actual net working
capital and net cash (after deducting transaction expenses) to confirm that the closing payment amount was not overstated. Further, if actual net working capital and net cash (after deducting transaction expenses) exceeds the estimated amounts used
to calculate the closing payment, such shareholders will receive additional consideration for the amount above such estimates. An additional $1 million has been held back to cover the expenses of the shareholders representative pursuant to the
Merger Agreement, the balance of which, to the extent not used, will also be distributed to Central Steels shareholders as of the closing of the Merger on a pro rata basis.
JTR will also assume approximately $8.9 million in transaction related obligations of Central Steel as a result of the closing of the
Merger, including certain transaction expenses and retention and change in control payments.
In connection with the anticipated closing
of the Merger and as contemplated by the Merger Agreement, Central Steel declared a special dividend in the amount of $50 on each share of its Common Stock, which was paid on June 29, 2018.
The cash consideration payable to the former Central Steel stockholders was financed using borrowings under that certain Credit Agreement,
dated as of July 24, 2015, as amended, by and among Ryerson, JTR and certain directly and indirectly wholly-owned subsidiaries of JTR as borrowers, certain directly and indirectly wholly-owned subsidiaries of JTR as guarantors of obligations
under the Credit Agreement, the lender parties thereto, and Bank of America, N.A., as administrative agent and collateral agent.
The
foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which was filed as Exhibit 2.1 to Ryersons Current Report on Form
8-K
filed with the Securities and Exchange Commission (the
SEC
) on June 5, 2018 and is incorporated in this Item 2.01 by reference.