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Exhibit(1)
NEWS RELEASE
CHICAGO BRIDGE & IRON COMPANY N.V.
FOR IMMEDIATE RELEASE: FOR FURTHER INFORMATION CONTACT:
JULY 31, 2000 MEDIA: BRUCE STEIMLE (815) 439-4006
ANALYSTS: JEAN BROWN (815) 439-4072
CHICAGO BRIDGE & IRON TO ACQUIRE HOWE-BAKER INTERNATIONAL
COMBINATION EXPECTED TO CREATE $1 BILLION ENGINEERING AND CONSTRUCTION COMPANY
PLAINFIELD, ILL. -- July 31, 2000 -- Chicago Bridge & Iron Company N.V. (NYSE &
ASE: CBI) has signed a definitive agreement to acquire Howe-Baker International,
Inc. in a transaction valued at approximately $145 million, including $28
million in cash, 8.1 million shares of CB&I common stock and $5.7 million in
assumed debt. In a simultaneous transaction, Howe-Baker's owner has agreed to
sell 4.3 million shares of CB&I common stock for $16.25 per share to an
additional investor. Howe-Baker is a leading U.S.-based engineering and
construction firm specializing in the design and construction of hydrocarbon
processing plants for customers in the refining, petrochemical and natural gas
processing industries. Completion of the transaction, expected during the fourth
quarter of this year, is subject to shareholder and regulatory approval. The
acquisition is expected to be accretive to earnings in 2001.
In 1999, Howe-Baker's pro forma revenues (including recent acquisitions
for the full year) were $308 million and net income was $26 million. CB&I's 1999
revenues were $675 million and net income was $18 million. Howe-Baker
International will operate as a wholly-owned subsidiary of Chicago Bridge & Iron
Company, and will continue to be run by its existing management team, led by
President and CEO Ronald D. Brazzel.
"CB&I and Howe-Baker are combining to create a premiere worldwide
engineering and construction company that can capture an increasing share of the
global energy infrastructure, including the growing need for natural gas
processing," said Gerald M. Glenn, Chairman, President and CEO of Chicago Bridge
& Iron.
"Like CB&I, Howe-Baker is a unique organization with a great reputation
and strong name recognition in the industry, and with parallel investment
appeals," Glenn continued. "It's a well-run company operating in targeted
markets with highly profitable businesses, a strong management team and a
culture that is an excellent fit with CB&I. This combination creates a growth
company that can expand into new markets while leveraging the industry upturn
over a larger business."
"The combination of Howe-Baker and CB&I is one with tremendous synergy
and growth potential," stated Ronald Brazzel, President and CEO of Howe-Baker.
"One of the great benefits we see is Howe-Baker's process engineering skills
coupled with the international project execution capabilities of CB&I. We are
delighted to combine our forces and look forward with great anticipation to the
real growth that lies ahead."
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BASIC TERMS AND CONDITIONS
Under the terms of the transaction, CB&I will pay $28 million in cash
and issue 8.1 million shares of common stock which will be conveyed to the
seller, WEDGE Group Incorporated, a private investment firm that owns 100% of
Howe-Baker International. WEDGE, in a simultaneous transaction, has agreed to
sell 4.3 million shares of CB&I common stock to First Reserve Corporation at a
price of $16.25 per share. Consummation of the First Reserve transaction is not
a condition to consummation of the WEDGE transaction. First Reserve is a private
equity fund manager specializing in the energy industry with over $1.7 billion
under management.
Upon completion of the contemplated transactions, WEDGE, which already
owns 400,000 shares of CB&I stock, will hold 24% of CB&I's outstanding shares,
and First Reserve will hold 24.5%. WEDGE and First Reserve have agreed to a
shareholder agreement with CB&I covering board representation, standstill
provisions, voting restrictions and transfer restrictions. WEDGE and First
Reserve will each nominate two candidates for election to CB&I's Supervisory
Board, which will expand from eight to 12 members. A special meeting of CB&I
shareholders will be held to seek approval of the various elements of the
transaction.
Financial advisors for the transaction are Credit Suisse First Boston
for Chicago Bridge & Iron and Goldman Sachs for WEDGE.
William H. White, President and CEO of WEDGE, stated, "The combination
of Chicago Bridge and Howe-Baker will create one of the world's largest and
strongest engineering and construction firms specializing in the oil and gas and
petrochemical industries, with the skills to compete on projects of virtually
any size worldwide. We are particularly enthusiastic about Howe-Baker's
gas-to-liquids technology and Chicago Bridge's LNG business. We see the
combination as being so compelling that we are taking a substantial equity
position in the combined entity."
William E. Macaulay, Chairman and CEO of First Reserve, stated, "We've
known of the unique capabilities of both CB&I and Howe-Baker in the energy
industry for many years, and we look forward to working with these two excellent
companies. We are confident our investment represents an attractive long-term
opportunity for our investors."
COMPANY DESCRIPTION
Based in Tyler, Texas, Howe-Baker International was established in
1945. The firm has about 2,000 employees and operates three principal business
units:
- Howe-Baker Engineers, that provides engineering, procurement
and construction services for the hydrocarbon industry,
specializing in hydrogen and synthesis gas plants, refinery
process units and natural gas processing plants;
- Matrix Engineering, Ltd., that provides refinery maintenance
and construction services primarily along the U.S. Gulf Coast;
and
- Callidus Technologies Inc., a combustion and environmental
technology company based near Tulsa, Oklahoma, that provides
proprietary burners, flares and incinerators for process
industries.
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STRENGTHS OF THE COMBINED COMPANY
The combination of Chicago Bridge & Iron and Howe-Baker will produce a
global leader in engineering and construction, with a history of proprietary
technological innovations and 165 years of combined experience in the design and
construction of petroleum, petrochemical and natural gas facilities. With a
worldwide network of engineers and suppliers, CB&I and Howe-Baker will be able
to provide hydrocarbon industry customers with value added, integrated process
and storage solutions.
PROSPECTS FOR GROWTH
Similar to CB&I, Howe-Baker expects to emerge from the recent trough in
the engineering and construction industry and is poised for recovery in its
markets in the U.S. It also anticipates expanding its international market
presence through synergies with CB&I's existing global infrastructure.
- NATURAL GAS INDUSTRY - Accelerating demand for natural gas is
being driven by environmental requirements for cleaner fuels
and the development of new gas-fired electricity generating
plants. Howe-Baker provides turnkey design-build services for
natural gas treatment, processing and liquefaction plants and
recently was awarded a natural gas project with a value in
excess of $30 million.
- REFINING - Howe-Baker is an industry leader in the design and
construction of crude oil desalting and dehydration units and
has acknowledged process expertise in the hydrotreating of
refinery streams, naptha reforming and crude oil distillate
treating. Growth is expected from expansion and optimization
projects worldwide.
- HYDROGEN AND SYNTHESIS GAS - Recognized as a U.S. market
leader in the construction of hydrogen and syngas plants,
Howe-Baker anticipates increased worldwide demand for these
facilities as refineries strive to meet new environmental
requirements for lower sulfur content in transportation fuels.
Hydrogen is a key element in most sulfur removal processes.
- EMERGING TECHNOLOGIES - Howe-Baker has positioned itself for
future growth in several emerging technologies that build upon
its existing core competencies, including gas-to-liquids
conversion, fuel cells and nitrogen rejection from natural
gas.
CONFERENCE CALL WEBCAST
Chicago Bridge & Iron will be hosting a conference call to discuss its
second quarter 2000 results and the acquisition of Howe-Baker International. The
call is scheduled for 10 a.m. CDT on Monday July 31, 2000, and will be broadcast
live via Internet webcast. The live webcast can be accessed at
www.streetevents.com/street/street1.html. Simply log on to this Web address at
least 15 minutes prior to the start of the call to register, download and
install any necessary audio software. A replay of the call will be available at
the above Web address shortly after the call. More information on the
acquisition and Howe-Baker is available on the CB&I Web site at
www.chicagobridge.com.
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FORWARD-LOOKING STATEMENTS
Any statements made in this release that are not based on historical
fact are forward-looking statements and represent management's best judgment as
to what may occur in the future. The actual outcome and results are not
guaranteed, are subject to risks, uncertainties and assumptions and may differ
materially from what is expressed. A variety of factors could cause business
conditions and results to differ materially from what is contained in the
forward-looking statements including, but not limited to, the uncertain timing
and the funding of new awards; cost overruns on fixed priced contracts; increase
in competition by competitors; fluctuating revenues resulting from the cyclic
nature of the individual markets in which the Company's customers operate;
reduced activity in the oil and gas industry, demand from which is the largest
component of the Company's revenue; and no assurance that there will be a
successful closing and integration of the acquisition of Howe-Baker
International, Inc. Readers of this release should also read the Company's most
recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q for a
further description of the Company's business and other information that
describes factors that could cause actual results to differ from such
forward-looking statements, including a description of the Tuban project issues,
as well as the Company's other filings with the Securities and Exchange
Commission (including, but not limited to its Registration Statement on Form S-1
[File No. 333-18065], as amended). The Company does not undertake to update any
forward-looking statements contained herein, whether as a result of new
information, future events or otherwise.
CB&I is a global engineering and construction company specializing in
the design and engineering, fabrication, field erection and repair of bulk
liquid terminals, storage tanks, process vessels, refrigerated storage and
process systems, and other steel plate structures and their associated systems.
Information about Chicago Bridge & Iron is available from the Company's Web site
at www.chicagobridge.com.
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