<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
BIRMINGHAM STEEL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
THE UNITED COMPANY SHAREHOLDER GROUP
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
----------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
---------------------------------
THE UNITED COMPANY SHAREHOLDER GROUP
REGARDING BIRMINGHAM STEEL CORPORATION
<PAGE> 3
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
I. Executive Summary
II. Birmingham Steel's Current Situation
III. The United Company Shareholder Group
IV. The New Plan
V. Change of Control Implications
- ------------------------------------------------------------------------ 2
<PAGE> 4
-----------------------------------------------------------------------------
EXECUTIVE SUMMARY
-----------------------------------------------------------------------------
<PAGE> 5
EXECUTIVE SUMMARY
- ------------------------------------------------------------------------------
Introduction
- As shareholders of Birmingham Steel Corporation ("Birmingham"
or the "Company"), we have become dissatisfied with the
Company's performance in recent years
- We have formed The United Company Shareholder Group (the
"Group") to nominate nine persons for election as directors of
the Company
- We have slated John D. Correnti, former Chief Executive
Officer of Nucor Corporation, to be the Chief Executive
Officer of the Company
Important Dates
- Birmingham has set December 2, 1999 for its annual shareholder
meeting
- Shareholders of record as of October 19, 1999 are entitled to vote
- Birmingham has set October 7, 1999 as the record date for the Group's
solicitation of written consents
----------------------------------------------------
IN ORDER TO INSTALL MR. CORRENTI AS CEO, WE NEED YOU
TO VOTE FOR OUR DIRECTOR NOMINEES
----------------------------------------------------
- ------------------------------------------------------------------------ 4
<PAGE> 6
EXECUTIVE SUMMARY
- ------------------------------------------------------------------------------
Birmingham Steel Stock Price Performance June 30, 1996 to Present
(Graph of Birmingham Steel Stock Price Performance from June 30, 1996 to
October 1, 1999)
- ------------------------------------------------------------------------ 5
<PAGE> 7
EXECUTIVE SUMMARY
- ------------------------------------------------------------------------------
Destruction of Shareholder Value - Birmingham Steel
(U.S. Dollars in Millions)
<TABLE>
<CAPTION>
Market Value of Equity
- ----------------------
<S> <C>
June 30, 1996 $472.3
June 30, 1999 $126.0
</TABLE>
<TABLE>
<CAPTION>
Total Market Capitalization (including debt)
- --------------------------------------------
<S> <C>
June 30, 1996 $779.8
June 30, 1999 $657.5
</TABLE>
- ------------------------------------------------------------------------ 6
<PAGE> 8
EXECUTIVE SUMMARY
- ------------------------------------------------------------------------------
Ineffective Current Management
"WE HAVE SELECTED A CORE GROUP OF WORLD-CLASS SUPPLIERS FOR OUR MEMPHIS
PROJECT. THESE VENDORS WERE CHOSEN BECAUSE OF THEIR COMMITMENTS TO QUALITY,
COST CONTROL AND THEIR ABILITY TO WORK ON AN AGGRESSIVE TIMETABLE,"
-Robert A. Garvey, current CEO of Birmingham Steel, June 27, 1996
- Continued start-up costs at the Memphis facility
- Twenty-three months after commencement of Memphis initial start-up
in November 1997 and capital costs of over $220 million
- Cartersville rolling mill project, which cost the Company $150
million ($80 million over budget), is still generating losses
and additional start-up costs
- Estimated $26 million in total start-up costs
- Total investment in Cartersville exceeds $275 million
- Fiscal 1997 investment in Pacific Coast Recycling which was
fully written off after three years of operating losses
- September 1997 investment of $15 million in Laclede Steel
Company which was fully written off after nine months
- Fiscal 1997 investment in Birmingham Southeast LLC which has
failed to turn a profit
- ------------------------------------------------------------------------ 7
<PAGE> 9
EXECUTIVE SUMMARY
- ------------------------------------------------------------------------------
Consistent Failure to Meet Wall Street Analysts' Expectations
WE BELIEVE CURRENT MANAGEMENT HAS LOST THE CONFIDENCE OF THE INVESTMENT
COMMUNITY BY CONSISTENTLY MISSING ANALYSTS' EARNINGS ESTIMATES
(Graph Comparing First Call Consensus EPS estimates to Actual EPS Reported by
Birmingham Steel for the period from December 31, 1995 to June 30, 1999)
- ------------------------------------------------------------------------ 8
<PAGE> 10
EXECUTIVE SUMMARY
- ------------------------------------------------------------------------------
Announced Restructuring Plan
BIRMINGHAM'S RESTRUCTURING PLAN, ANNOUNCED ON AUGUST 18, 1999,
IS DEFICIENT IN A NUMBER OF AREAS
Strategy
- - Sale of the "SBQ business" and provision of $173.2 million for expected loss
on sale
Implication
- - Current management incapable of fixing business
- Therefore must sell at any price
- Selling during cyclical low and after poor recent performance
- Expected proceeds less than half the over $600 million invested to date
- - Losses until sale must still be funded
- - Exiting DRI purchase agreements likely to increase losses
- - We believe the assets have significant potential
- ------------------------------------------------------------------------ 9
<PAGE> 11
EXECUTIVE SUMMARY
- ------------------------------------------------------------------------------
Restructuring Plan - Analyst Comments
BIRMINGHAM'S RESTRUCTURING ANNOUNCEMENT HAS BEEN MET
WITH DISFAVOR BY SOME MEMBERS OF THE INVESTMENT COMMUNITY
- - "We view the restructuring plan that Birmingham Steel announced last night as
a disappointment. . ."
- - "We believe the current market value is likely less than half of the
approximately $650 million that has been invested in them to-date due to the
fact that the steel market is at a cyclical low and that the recent
performance at the three assets has been poor."
- - "This [the sale of the SBQ business and DRI facility] would leave the company
with an enterprise value of about $525 million and EBITDA of less than $100
million, implying that the company is fairly valued at the current share
price [$8.00]."
- - "WE BELIEVE THAT THE BETTER SITUATION FOR SHAREHOLDERS WOULD BE FOR CURRENT OR
NEW MANAGEMENT TO COMPLETE THE START-UP OF THE ASSETS AND AWAIT THE CYCLICAL
RECOVERY OF THE MARKET BEFORE MAKING A RESTRUCTURING DECISION."
- Scott Morrison
Donaldson, Lufkin & Jenrette Equity Research, August 19, 1999
- ------------------------------------------------------------------------ 10
<PAGE> 12
EXECUTIVE SUMMARY
- ------------------------------------------------------------------------------
Summary of the New Plan
- Provide effective management leadership
- Operate core facilities at or above nameplate capacity
- Re-establish customer relationships and confidence
- Fix the Memphis melt shop and operations at Cartersville
- Repair the balance sheet
- GROW, NOT SHRINK, THE COMPANY
- ------------------------------------------------------------------------ 11
<PAGE> 13
-----------------------------------------------------------------------------
BIRMINGHAM STEEL'S CURRENT SITUATION
-----------------------------------------------------------------------------
<PAGE> 14
BIRMINGHAM STEEL'S CURRENT SITUATION
- ------------------------------------------------------------------------------
Relative Stock Price Performance June 30, 1996 to Present
(Graph of Relative Stock Price Performance between Birmingham Steel, S&P 400,
and Mini-Mill Composite from June 30, 1996 to October 1, 1999)
(a) Mini-mill composite includes Co-Steel, Commercial Metals, IPSCO, Keystone
Consolidated, Nucor Corp., Northwestern Steel and Wire, Quanex Corp., Oregon
Steel, Roanoke Electric Steel Corp., Schnitzer Steel, Steel Dynamics and Texas
Industries
- ------------------------------------------------------------------------ 13
<PAGE> 15
BIRMINGHAM STEEL'S CURRENT SITUATION
- ------------------------------------------------------------------------------
Financial Performance of Comparable Companies
<TABLE>
<CAPTION>
Average Annual Shareholder Return (a)
- ------------------------------------
%
-----
<S> <C>
Roanoke 28.4
IPSCO 15.3
TXI 10.5
Quanex 1.6
CMC - 1.9
Nvcor - 2.8
Timken - 2.9
Steel Dynamics - 4.5(c)
Oregon - 6.0
Co-Steel - 8.8
Schnitzer -13.0
Keystone -16.8
Birmingham -19.6
NWSW -49.3
<CAPTION>
Average Annual Return on Equity (b)
- -----------------------------------
%
----
<S> <C>
Keystone 18.9
TXI 17.1
Roanoke 17.0
Nvcor 15.6
Timken 14.8
CMC 12.4
IPSCO 12.1
Quanex 9.5
Steel Dynamics 8.3(c)
Schnitzer 8.2
Oregon 4.8
Co-Steel 2.5
NWSW 0.7
Birmingham -20.5
</TABLE>
- ------------
(a) Source: Fact Set. Represents the average annual shareholder return through
dividends and stock price appreciation over the last three years ended
October 1, 1999.
(b) Source: Fact Set. Represents the average annual return on equity for the
last three fiscal years. Includes all fiscal years ended as of June 30,
1999. Birmingham Steel average reflects FY 1999 net loss of $224.2mm and
post restructuring stockholders' equity of $230.7mm, as reported in the
company's September 15, 1999 14A filings.
(c) Steel Dynamics calculated from November 30, 1996.
- ------------------------------------------------------------------------ 14
<PAGE> 16
BIRMINGHAM STEEL'S CURRENT SITUATION
- ------------------------------------------------------------------------------
The Debt Reported
CURRENT MANAGEMENT RECENTLY ANNOUNCED THAT THEY REDUCED TOTAL DEBT
BY $89 MILLION DURING FOURTH QUARTER 1999...BUT A CLOSER LOOK REVEALS:
<TABLE>
<S> <C>
$ 610 million March 31, 1999 reported total debt per Company 10-Q
$ (67 million) 4Q99 reclassification of debt as a leveraged lease at Cartersville
$ (14 million) Inventory liquidation
$ (8 million) Actual debt reduction from 4Q99 operating cash flows
-------------
$ 522 million Reported total debt at June 30, 1999
ADDING BACK:
$ 67 million Debt reclassification mentioned above
$ 85 million Debt reclassified as a leveraged lease at Memphis and a tax lease at Cartersville
-------------
$ 674 MILLION TOTAL DEBT OBLIGATIONS AT JUNE 30, 1999
=============
</TABLE>
- ------------------------------------------------------------------------ 15
<PAGE> 17
BIRMINGHAM STEEL'S CURRENT SITUATION
- ------------------------------------------------------------------------------
Liquidity "Burn Rate"
(U.S. Dollars in Millions)
(Graph of Existing Revolver Debt and Estimated Date Company will Exceed its
Existing Credit Limit of $235 million based on Revolver Debt Activity Since
June 30, 1999)
6/30/99 Company reported Revolver Debt of $186.6 million.
9/15/99 Company reported Revolver Debt of $205 million.
9/27/99 Existing bank lenders revised Revolving Credit Facility from $300 to
235 million through 12/28/99. Current Revolver Debt of 216 million.
11/25/99 Estimated date the Company will exceed its existing Credit Limit (a)
12/28/99 Expiration of "Bridge" Credit Facility
- -------------
(a) "Burn Rate" calculated per the announced Revolving Debt balance on
September 28, 1999 to the reported balance as of fiscal year end
June 30, 1999.
- ------------------------------------------------------------------------ 16
<PAGE> 18
BIRMINGHAM STEEL'S CURRENT SITUATION
- --------------------------------------------------------------------------------
Poor Operating Supervision and Inadequate Leadership
"While start-up risk is a fact of life in the steel industry, most of the
Company's spending is on proven technology. Consequently production
problems are not likely to be major." (a)
The Memphis Facility
- - Began operations at the $220 million melt shop in November 1997
- Originally announced mill would operate at 800,000 tpy by June 1998
- Forecast pushed back several times
- - Forty-five percent operating capacity not reached until March 1999
- Sixteen months after start-up
- - The Group believes the problem at Memphis is lack of leadership, repeated
management turnover and poorly trained personnel and supervisors, not
equipment or infrastructure
Quarterly Pre-Operating/Start-up Costs (b)
(U.S. Dollars in millions)
<TABLE>
<CAPTION>
<S> <C>
1Q98 $ 2.2
2Q98 $ 6.5
3Q98 $12.8
4Q98 $ 9.0
1Q99 $ 9.5
2Q99 $ 7.3
3Q99 $14.8
</TABLE>
(a) Michelle Applebaum, Salomon Smith Barney Equity Research, November 20, 1997.
(b) Source: Company public filings
- ----------------------------------------------------------------------------- 17
<PAGE> 19
BIRMINGHAM STEEL'S CURRENT SITUATION
- ------------------------------------------------------------------------------
Management of Start-Up Operations
American Steel & Wire ("AS&W")
- SBQ business purchased in November 1993
- Despite its inefficient and antiquated facilities, AS&W was
profitable until the quarter ended June 1996, contributing $20.8
million to operating earnings in fiscal 1995
- Has lost money ever since
- Birmingham Steel planned to build a world-class bar mill at AS&W's
facilities in Cleveland, OH and supply it with high quality billets
from a new EAF melt shop in Memphis, TN
- The start-up problems at Memphis, however, have plagued the
Cleveland facility, preventing it from achieving stable operations
(i.e., lost customers, late deliveries, poor yields, outsourcing
higher-priced billets from third parties)
- The Birmingham Steel SBQ business remains unprofitable
- Current Birmingham Steel management recently took a $173.2 million
charge for expected losses on its intended sale of the SBQ business
- We expect the loss on sale to be even greater
- The cost of exiting purchase commitments related to this unit's 50%
owned DRI facility is likely to further the loss on sale of the SBQ
business
- ------------------------------------------------------------------------ 18
<PAGE> 20
BIRMINGHAM STEEL'S CURRENT SITUATION
- ------------------------------------------------------------------------------
Management of Start-Up Operations (cont'd)
Birmingham Southeast LLC
- Eighty-five percent owned joint venture formed in December 1996 to
produce merchant and rebar products
- The Company contributed its profitable Jackson, MS mill, paid $43
million in cash for its partner's marginally profitable
Cartersville, GA facilities, and assumed $44 million in liabilities
related to those facilities
- Birmingham Southeast assumed management of Cartersville and closed
the 12" rolling mill
- Began $18 million melt shop upgrade and a planned $70 million
installation of mid-section rolling mill at Cartersville
- Cartersville's mid section rolling mill originally planned as $70
million investment to start-up in 1998
- Did not start until March 1999 at total cost of approximately $150
million
- All electrical controls must be replaced before reaching design
capacity
- This approximately $255 million total investment is STILL IN THE
START-UP MODE
- Current management estimates additional six to nine months before
mill fully operational
- Combined operating and start-up costs of $14.2 million during
Fiscal 1998 and 1999
- Expects $12 million in additional start-up expenses in Fiscal 2000
- ------------------------------------------------------------------------ 19
<PAGE> 21
BIRMINGHAM STEEL'S CURRENT SITUATION
- ------------------------------------------------------------------------------
Management of Other Investments
Laclede Steel Company
- Purchased 25% stake for $15 million from IVACO in September 1997
- At the time, Laclede had unfunded pension and OPEB liabilities of
over $130 million, long-term debt of $107 million and shareholders'
equity of just $17 million
- From September 1997 to June 1998, Birmingham Steel recognized $2.7
million in losses from this investment
- Less than a year after the original purchase, Birmingham Steel wrote
off its remaining $12.3 million investment in Laclede
Pacific Coast Recycling ("PCR")
- Joint venture with Mitsui & Co. Ltd, purchased a Long Beach, CA
export scrap operation during Fiscal 1997
- Operation has apparently never been profitable
- Burdened by lease requiring significant monthly payments and over
18 years remaining life
- Current management plans to write off its $19.3 million investment in
PCR
- Less than three years after its initial investment
- ------------------------------------------------------------------------ 20
<PAGE> 22
-----------------------------------------------------------------------------
THE UNITED COMPANY SHAREHOLDER GROUP
-----------------------------------------------------------------------------
<PAGE> 23
THE UNITED COMPANY SHAREHOLDER GROUP
- ------------------------------------------------------------------------------
Proposed Chief Executive Officer
Mr. Correnti is recognized as a communicator and motivator with employees,
steel analysts, shareholders, customers and suppliers
John D. Correnti
- - The Group has slated John D. Correnti to become the Chief Executive Officer of
the Company
- - Mr. Correnti served as President, Chief Executive Officer, and Vice Chairman
of Nucor Corporation from January 1996 to June 1999 and as President and Chief
Operating Officer from 1991 to 1996
- Nucor is recognized as the premiere steel mini-mill company in the world and
is the second largest steel producer in the United States
- - While Mr. Correnti served in an executive capacity, Nucor's revenues increased
from approximately $1.5 billion in 1991 to $4.1 billion in 1998
- Earnings increased during the same period to nearly $300 million from
approximately $75 million and stockholders' equity increased to over
$2.0 billion from approximately $1.1 billion
- - In 1998, Mr. Correnti was recognized by New Steel Magazine as its Steel Maker
of the Year
- - Mr. Correnti has over 30 years experience in the steel industry
- Prior to joining Nucor, he was associated with United States Steel
Corporation from 1969 to 1980 in various managerial capacities
- ------------------------------------------------------------------------ 22
<PAGE> 24
THE UNITED COMPANY SHAREHOLDER GROUP
- ------------------------------------------------------------------------------
Successful Start-ups Under John Correnti
One of the principal strengths of John Correnti is in building cutting edge
technology mills, on time and with expected start-up results.
(Geographical diagram of Nucor start-ups during John Correnti's tenure:
Norfolk, NE; Crawfordsville, IN; Brigham City - Plymouth, UT; Hickman, AR;
Blytheville, AR; Jewett, TX; Berkeley, SC; Darlington - Florence, SC.)
- ------------------------------------------------------------------------ 23
<PAGE> 25
THE UNITED COMPANY SHAREHOLDER GROUP
- ------------------------------------------------------------------------------
Creating Shareholder Value - John Correnti at Nucor Corp.
(U.S. Dollars in Millions)
(Chart of Increase in Market Value of Equity and Total Market Capitalization of
Nucor Corp. from December 31, 1991 to December 31, 1998)
<TABLE>
<CAPTION>
Market Value of Equity
- ----------------------
<S> <C>
December 31, 1991 $1,933.1
December 31, 1998 $3,774.4
</TABLE>
<TABLE>
<CAPTION>
Total Market Capitalization (including debt)
- --------------------------------------------
<S> <C>
December 31, 1991 $2,131.9
December 31, 1998 $4,272.3
</TABLE>
- ------------------------------------------------------------------------ 24
<PAGE> 26
THE UNITED COMPANY SHAREHOLDER GROUP
- ------------------------------------------------------------------------------
Step I - Meet with Equity Holders
(Flow Chart diagraming meeting with equity holders)
1. Meet with Equity Holders
greater than 50% Support
2. Approach Birmingham BOD
BOD grants the Group majority seats
3. No Change of Control
- Proceed to Step II
1. Meet with Equity Holders
greater than 50% Support
2. Approach Birmingham BOD
BOD denies the Group majority seats
3. Change of Control via Proxies
- Bank debt defaults
- Private debt put notice
- Proceed to Step II
- -------------------------------------------
1. Meet with Equity Holders
less than 50% Support
2. Stop
- ------------------------------------------------------------------------ 25
<PAGE> 27
THE UNITED COMPANY SHAREHOLDER GROUP
- ------------------------------------------------------------------------------
Step II - Meet with Debt Holders
(Flow Chart diagraming meeting with debt holders.)
1. Meet with Debt Holders
2. Explain Plan, Provide Comfort
3. Execute Correnti Plan
1. Meet with Debt Holders
2. Debt Holders Decisions
3. Evaluate Refinancing Alternatives
4. Debt Restructuring
1. Meet with Debt Holders
2. Debt Holders Decisions
3. Evaluate Refinancing Alternatives
4. Refinance (Step III)
1. Meet with Debt Holders
2. Debt Holders Decisions
3. Execute Correnti Plan
- ------------------------------------------------------------------------ 26
<PAGE> 28
THE UNITED COMPANY SHAREHOLDER GROUP
- ------------------------------------------------------------------------------
Step III - Refinance
(Flow Chart diagraming the refinancing)
1. Equity Infusion?
2. Public Market Debt
3. Execute Correnti Plan
1. Equity Infusion?
2. Private & Public Market Financing
3. Execute Correnti Plan
1. Equity Infusion?
2. Private & Public Market Financing
3. Debt Restructuring
- ------------------------------------------------------------------------ 27
<PAGE> 29
THE UNITED COMPANY SHAREHOLDER GROUP
- ------------------------------------------------------------------------------
Profile of Director Nominees
<TABLE>
<CAPTION>
Name Age Background
<S> <C> <C>
John D. Correnti 52 Served at Nucor Corporation from 1980 until
June 1999, including most recently as Vice
Chairman of the Board of Directors,
President and Chief Executive Officer.
Currently serves on the Board of Directors
of Harnischfeger Industries and Navistar
International Corporation.
James A. Todd, Jr. 71 Currently retired, Mr. Todd was the Chief
Executive Officer and Chairman of the Board
of Directors of the Company from 1991 until
January 1996. Served as an employee and
Director of the Company from January 1996
until retiring in August 1996 and as a
consultant to the Chairman of the Board from
August 1996 until December 1996. In 1993,
was recognized by New Steel Magazine as its
Steelmaker of the Year. Director of Kinross
Gold Corporation.
James W. McGlothlin 59 President, Chief Executive Officer, and
Chairman of the Board of Directors of The
United Company since 1987. The United
Company is primarily engaged in the business
of financial services and also invests in or
has operations in oil and gas, real estate
and golf development, cogeneration, and
construction supply and distribution. Serves
on the Board of Directors of CSX
Corporation.
Donna M. Alvarado 50 President of Aguila International, an
international business development
consulting firm, since 1994. Was President
and Chief Executive Officer of Quest
International, a non-profit organization
engaged worldwide in developing, publishing
and marketing training products for public
and private education systems, from 1989 to
1994. Director of Harnischfeger Industries
and Park National Bank.
Robert M. Gerrity 61 Self-employed as a consultant since 1995.
Was Vice Chairman and a member of the Board
of Directors of New Holland N.V., an
agricultural and industrial equipment
manufacturing company, from 1991 to 1995.
From 1987 to 1991, served as the President
and Chief Executive Officer of Ford New
Holland Inc., an agricultural and industrial
equipment manufacturing company subsequently
consolidated into New Holland N.V. Prior
thereto, served in various management
capacities at Ford Motor Company, including
President of Ford of Brazil. Currently a
director of Standard Motor Products and
Harnischfeger Industries. Also served as a
director of Rubbermaid Inc. from 1992 to
1998.
</TABLE>
- ------------------------------------------------------------------------ 28
<PAGE> 30
THE UNITED COMPANY SHAREHOLDER GROUP
- ------------------------------------------------------------------------------
Profile of Director Nominees (cont'd)
<TABLE>
<CAPTION>
Name Age Background
<S> <C> <C>
Alvin R. Carpenter 57 President and CEO of CSX Transportation,
Inc., a railroad transportation company and
a wholly-owned subsidiary of CSX
Corporation, since 1991. Vice Chairman of
CSX Corporation since July, 1999. Served as
Executive Vice President of Sales and
Marketing at CSX Transportation from 1989 to
1991.
Robert H. Spilman 71 Sole-proprietor of Spilman Properties, an
investment company. Served in various
capacities at Bassett Furniture Industries,
Inc., a manufacturer and retail seller of
home furniture, from 1957 until 1997,
including as Chief Executive Officer and
Chairman of the Board of Directors.
Currently serves as director of The Pittston
Company and Dominion Resources.
Jerry E. Dempsey 66 Currently retired, Mr. Dempsey was Chief
Executive Officer and Chairman of the Board
of Directors of PPG Industries, Inc., a
manufacturer of protective and decorative
coatings, fiberglass products, and specialty
chemicals, from 1993 until 1997. Was
President and Chief Executive Officer of
Chemical Waste Management and Senior Vice
President of WMX Technologies, from 1985
until 1993. Director of Eastman Chemical
Company and Navistar International
Corporation.
Steven R. Berrard 45 is Managing Partner of New River Capital
Partners, a private equity firm with an
investment strategy focused on branded
specialty retail, e-commerce and education.
From January 1997 to September 1999, Mr.
Berrard was Co-Chief Executive Officer of
AutoNation, Inc., the world's largest
automotive retailer and a leading provider
of vehicle rental services. Prior to joining
AutoNation, he was President and Chief
Executive Officer of the Blockbuster
Entertainment Group, a division of Viacom,
Inc., one of the world's largest
entertainment companies. He served as Vice
Chairman, President and Chief Operating
Officer of Blockbuster Entertainment
Corporation until its merger with Viacom in
1994. In addition, Mr. Berrard served as
President and Chief Executive Officer and a
Director of Spelling Entertainment Group,
Inc. from 1993 to 1996 and as a Director of
Viacom from 1994 to 1996. Mr. Berrard
currently serves as a Director of Gerald
Stevens, Inc., Boca Resorts, Inc. and
AutoNation. Mr. Berrard's business address
is One Financial Plaza, Suite 1100, Fort
Lauderdale, Florida 33344.
</TABLE>
- ------------------------------------------------------------------------ 29
<PAGE> 31
-----------------------------------------------------------------------------
THE NEW PLAN
-----------------------------------------------------------------------------
<PAGE> 32
THE NEW PLAN
- ------------------------------------------------------------------------------
Plan Outline
OUR GOAL: TO MAKE BIRMINGHAM STEEL ONE OF THE LOWEST-COST, HIGHEST-QUALITY
STEEL PRODUCERS IN BOTH MERCHANT BAR AND SBQ
General
- - Provide effective management leadership
- - Obtain control over Birmingham Steel without triggering the "change in
control" provisions associated with the Company's outstanding debt securities
- Provides timing flexibility to access the capital markets, if required
- Avoids forced, potentially disadvantageous capital markets transactions
- - Implement "Nucor-style" attitudes, philosophies and culture
- - Hire select individuals that share this operating philosophy
- ------------------------------------------------------------------------ 31
<PAGE> 33
THE NEW PLAN
- ------------------------------------------------------------------------------
Plan Outline (cont'd)
Operating Plan
- - Operate core facilities at or above nameplate capacity
- Any potential pressure on selling price is more than compensated with
improved cost position
- - Re-establish relationships with Service Center customer base for core
operations
- Service Centers account for over half of merchant bar,
yet they have been largely ignored by current management
- - SBQ Business:
- Re-establish customer confidence with automotive and other OEMs
- Improve qualification performance
- - Selective hiring of experienced sales people in Cleveland
- ------------------------------------------------------------------------ 32
<PAGE> 34
THE NEW PLAN
- ------------------------------------------------------------------------------
Plan Outline (cont'd)
Operating Plan (cont'd)
- - Focus efforts on fixing the Memphis melt shop - tremendous upside potential
- Install competent, permanent management team
- Reduce employee turnover and improve employee training
- Once Cleveland is properly supplied with Memphis billets, it should be one
of the lowest-cost SBQ producers in the United States
- Non-union facility
- World-class equipment
- May take at least 18 months to implement
- - Fix Operations at Cartersville
- Replace electrical control system using a reputable vendor
- Reduce down-time through adequate preventative and predictive maintenance
- - Take advantage of location in the heart of the Southeast construction market
- ------------------------------------------------------------------------ 33
<PAGE> 35
THE NEW PLAN
- ------------------------------------------------------------------------------
Plan Outline (cont'd)
Strategic Plan
- - First priority is to fix Birmingham's balance sheet
- - Secondly, attempt to become a leader in the consolidation of the steel
industry
- Our goal is to grow, not shrink, the Company
Financial Plan
- - Improve cash flows through better operational performance and customer
satisfaction
- - Recapitalize the Company when the capital markets allow a reasonable
opportunity
- - Evaluate asset sales only when fair values can be obtained
- ------------------------------------------------------------------------ 34
<PAGE> 36
-----------------------------------------------------------------------------
CHANGE OF CONTROL IMPLICATIONS
-----------------------------------------------------------------------------
<PAGE> 37
CHANGE OF CONTROL IMPLICATIONS
- ------------------------------------------------------------------------------
Cash Effects Upon a Change of Control (a)
(U.S. Dollars in Millions)
THE CURRENT BOARD OF DIRECTORS CAN SPARE THE COMPANY THE EXPENSE AND
EXPOSURE OF A CHANGE OF CONTROL BY AGREEING TO NOMINATE A COMPROMISE
SLATE OF DIRECTORS(C)
- This change of control is what we are trying to avoid
<TABLE>
<S> <C>
$216.0 Revolver balance - placed into default upon change of control
280.0 Senior Unsecured Notes potentially "put" back to Company upon
change of control
9.1 Make-whole provision on Notes
6.5 Executive severance packages
1.4 Vesting under ERP / CDP (b)
------
$513.0 POTENTIAL CASH LIABILITY
======
</TABLE>
IN ADDITION, ALL COMPANY OPTIONS OUTSTANDING IMMEDIATELY VEST
- ------------
(a) Source: Company Preliminary Proxy filed September 22, 1999.
(b) ERP/CDP: Executive Retirement Plan / Compensation Deferral Plan.
(c) Assumes the nominated compromise slate is elected by the Company
shareholders.
- ------------------------------------------------------------------------ 36
<PAGE> 38
CHANGE OF CONTROL IMPLICATIONS
- ------------------------------------------------------------------------------
Debt Clauses
Bank Credit Agreement
- A "change in control" includes a change in the majority of the Board
of Directors during any twelve month period (other than action by
existing BOD)
- Constitutes an event of default
- Waivable upon agreement of a majority (determined by dollar value
held) of the bank lenders
Senior Notes
- A "change in control" includes any acquisition by any person or group
of the power to elect, appoint or cause the election or appointment
of at least a majority of the members of the Board of Directors
- Requires the Company to make to the note holders a written offer to
prepay the senior notes
- Waivable by each note holder on an individual basis
- ------------------------------------------------------------------------ 37
