TIMET Announces Strategic Investment in Special Metals Corporation
DENVER, July 9, /PRNewswire/ -- Titanium Metals Corporation ("TIMET")
(Nasdaq: TIMT) announced today that it has agreed to invest $125 million in
convertible preferred securities of Special Metals Corporation (Nasdaq:
SMCX) as part of Special Metals' plan, announced today, to acquire the Inco
Alloys International business unit of Inco Limited.
TIMET also announced that it had entered into an agreement in principle with
Special Metals to form a strategic alliance with respect to manufacturing,
marketing, and product development. This alliance would encompass (1) a
manufacturing arrangement whereby TIMET would convert certain titanium
products (primarily titanium products for new uses) at the facilities of
Special Metals/Inco Alloys International, (2) plans by Special Metals and
TIMET to jointly market titanium and nickel alloy products to jet engine
manufacturers, their suppliers, and other industries, and (3) joint efforts
by TIMET and Special Metals to develop new uses for titanium and nickel
alloys.
The non-voting preferred securities of Special Metals to be acquired by
TIMET will accrue dividends at the rate of 6.625% per annum and will be
convertible into Special Metals' common stock at a conversion price equal to
125% of the average closing price of Special Metals shares over the 40
consecutive day trading period ending on August 5, 1998. The preferred
securities will be mandatorily redeemable after seven and one-half years.
As part of the agreement, TIMET will be entitled, upon closing, to nominate
two members of the Special Metals board of directors.
The investment by TIMET is conditioned on, among other things, the closing
of the acquisition of Inco Alloys International by Special Metals, which is
currently expected to occur during the third quarter. Under that
transaction, Special Metals is acquiring Inco Alloys International for $408
million in cash, financed through debt and the investment by TIMET. On a
pro forma basis (assuming Inco Alloys International was acquired as of
January 1, 1997), the net sales of the combined Special Metals -- Inco
Alloys International would have been $854.5 million, with pro forma EBITDA
of $96.5 million. Special Metals has indicated that the transaction is
expected to be accretive to its earnings based upon planned operating
synergies and diversification opportunities. Special Metals has
manufacturing facilities in New Hartford, New York, Dunkirk, New York,
Princeton, Kentucky, and Ann Arbor, Michigan. Inco Alloys International has
approximately 3,000 employees in operations located primarily in Huntington,
West Virginia and in the United Kingdom.
Commenting on the proposed transaction, TIMET Chairman and CEO, J. Landis
Martin, noted: "We believe the proposed investment in Special Metals
represents a very attractive opportunity for TIMET. From a strategic
standpoint, we believe the relationship being formed between TIMET and
Special Metals will provide both companies with meaningful joint marketing
and product development opportunities. Our investment in the combined
Special Metals-Inco Alloys International will also allow TIMET to be an even
more significant participant in the non-aerospace markets for specialty
metals products and provide significant additional mill conversion capacity
to support TIMET's growth in new and emerging-market applications. From the
standpoint of an investor, we are confident that the management of Special
Metals will be able to enhance its value to its own stockholders, including
TIMET, by capitalizing on the numerous synergies between Special Metals,
whose principal market is the aerospace industry, and Inco Alloys
International, which is one of the world's largest manufacturers of
high-performance nickel alloys principally for the industrial market."
Wasserstein Perella & Co. has acted as financial advisor to TIMET in this
transaction.
Special Metals Corporation, headquartered in New Hartford, New York, is one
of the world's leading producers of wrought nickel-based superalloys and
special alloy long products.
TIMET, headquartered in Denver, Colorado, is a leading worldwide integrated
producer of titanium metal products.
The statements in this release relating to matters that are not historical
facts are forward looking statements that involve risks and uncertainties,
including, but not limited to, the cyclicality of the commercial aerospace
industry, future global economic conditions, global productive capacity,
changes in product pricing, and other risks and uncertainties associated
with the Company's business included in the Company's filings with the
Securities and Exchange Commission, as well as the related risks and
uncertainties associated with the nickel industry and Special Metals'
integration of the business of Inco Alloys International, all as described
in Special Metals' filings with the Securities and Exchange Commission.
/NOTE TO EDITORS: TIMET has scheduled a conference call to discuss the
Special Metals Transaction with the investment community for 1 p.m., Eastern
Daylight Time, on Thursday, July 9, 1998. On the call will be J. Landis
Martin, Chairman and Chief Executive Officer, Andrew R. Dixey, President and
Chief Operating Officer, and J. Thomas Montgomery, Jr., Vice President--
Finance and Treasurer. Participants can access the call by dialing
1-800-611- 1147 (domestically) or 612-332-0342 (internationally). A taped
replay of the call will be available until 11:59 p.m., Eastern Daylight
Time, on August 9, 1998, by calling 1-800-475-6701 (domestically) and
320-365-3844 (internationally), and using the access code 398442./
/CONTACT: J. Landis Martin, Chairman and CEO of Titanium Metals
Corporation, 303-296-5600/
09:01 EDT |
