Filed under: Metals & Mining
In Apr-96 U.S. cold finished steel bars producer Bliss & Laughlin Industries Inc. (‘B&L’) was acquired by Bar Technologies – controlled by The Blackstone Group (‘Blackstone’) in conjunction with Veritas Capital Inc. (‘Veritas’) – in a public tender offer at US$9.50 per share.
This valued the equity at approximately US$38m. Including US$16.6m in net debt at 30-Sept-95 the total consideration amounted to approximately US$55m.
This implied the following multiples: 32% of sales for the year ended 30-Sep-95 (US$169m, 3.7x net tangible capital turn), 4.8x EBITDA for the year ended 30-Sep-95 (US$11.4m, 6.7% margin), 5.7x EBITA for the year ended 30-Sep-95 (US$9.6m, 5.7% margin), and 1.2x net tangible capital at 30-Sep-95 (US$46m).
B&L was created through a US$20m management buyout in Oct-84 of the Bliss & Laughlin Steel division of diversified manufacturer Axia Inc. (‘Axia’). This MBO was completed at the time of the US$173m buyout of Axia itself, which was sponsored by Merrill Lynch Capital Markets.
Filed under: Metals & Mining
In Apr-96 The Blackstone Group (‘Blackstone’) acquired a 58.6% fully diluted equity interest in U.S. hot rolled steel bar producer Bar Technologies (‘BarTech’) for US$30m in a recapitalization that also involved BarTech acquiring all of the outstanding shares of cold finished steel bar producer Bliss & Laughlin Industries Inc. (‘B&L’) for approximately US$38m.
BarTech was formed by Veritas Capital in Sep-94 to purchase the idle assets of the former Bar Rod and Wire Division of Bethlehem Steel Coporation for a total consideration of US$26.5m and commenced commercial steel production only in 1996.
BarTech had no sales for the year 1995 therefore no meaningful multiple can be calculated based on historic data. However we can use the projected financial information on page 79 of the registration statement in an effort to extract some meaningful multiples (although we stress our hesitation in using projections).
Based on the US$51m equity valuation implied by the Blackstone capital contribution and US$133m in net debt at 30-Jun-96 the enterprise value of the transaction amounted to US$184m.
This implied 56% of projected sales for the year ended 30-Sept-97 (US$329m). In an effort to put this into perspective we mention that the realized sales for the year ended 27-Sept-97 amounted to some US$221m, 33% below the projected level. So much for M&A projections!
In Aug-99 BarTech was merged with Republic Engineered Steels and the steel making and bar producing assets of USS/Kobe Steel Company in a series of mergers and asset transfers.
The newly formed company with US$1.33bn in pro forma sales for 1999 and US$1.05bn in assets was named Republic Technologies International, L.L.C. (‘RTI’) and was 70% owned by Blackstone and Veritas affiliates and a combined 30% by USX and Kobe.
RTI filed for Chapter 11 bankruptcy protection in Apr-01 with US$1.7bn in liabilities. The assets were subsequently sold to a consortium consisting of KPS Special Situations and Hunt Investment Group for US$436m in Aug-02.
