SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K/A
CURRENT REPORT
(Amendment No. 1 to Form 8-K filed December 10, 1996)
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 2, 1996
BIRMINGHAM STEEL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State of other
jurisdiction of
incorporation)
1-9820
(Commission File
Number)
13-3213634
(I.R.S. Employer
Identification No.)
1000 Urban Center Drive, Suite 300
Birmingham, Alabama
(Address of principal executive offices)
35242-2516
(Zip Code)
Registrant's telephone number, including area code: (205)970-1200
<PAGE>
Item 5 of the Current Report on Form 8-K filed December 10, 1996 is
hereby amended to read as follows:
Item 5. Other Events
On December 2, 1996, Birmingham Steel Corporation, a Delaware
corporation ("BSC") completed its acquisition of certain assets of Atlantic
Steel Industries, Inc., a New York corporation ("Atlantic"), through a newly
created limited liability company, Birmingham Southeast, LLC ("Birmingham
Southeast"), pursuant to the terms of that certain Contribution Agreement, dated
as of November 15, 1996, by and among IVACO Inc. ("IVACO"), Atlantic, BSC and
Birmingham Southeast. Birmingham Southeast, a Delaware limited liability
company, is owned 85% by Birmingham East Coast Holdings, Inc., an affiliate of
BSC, and 15% by Canron Industries, Inc., an affiliate of IVACO, a Canadian
corporation and the parent corporation of Atlantic.
Contribution Agreement. Under the Contribution Agreement, BSC
contributed substantially all of the operating assets of its steel mill located
in Jackson, Mississippi (the "Jackson Mill") and $43.3 million in cash to
Birmingham Southeast in return for 85% of the membership interest in Birmingham
Southeast. Atlantic contributed substantially all of the operating assets of its
steel mill located in Cartersville, Georgia (the "Cartersville Mill"), and
received 15% of the membership interests in Birmingham Southeast and $43.3
million in cash. In addition, Birmingham Southeast assumed certain specified
obligations of Atlantic relating to the Cartersville Mill and assumed certain
liabilities and contracts of BSC relating to the Jackson Mill and of Atlantic
relating to the Cartersville Mill. The Atlantic assets include a high-quality
meltshop and a merchant product rolling mill. The BSC assets consist of a
meltshop and a merchant product rolling mill. The acquisition transaction did
not include BSC's scrap operation at Klean Metals located adjacent to the
Jackson Mill.
As part of the financing of this transaction, BSC will sell in
an underwritten public offering one million shares of its common stock currently
held as treasury shares, which were previously acquired as part of an announced
stock buyback program.
Inventory Agreements. In connection with the Contribution
Agreement, each of BSC and Atlantic (the "Sellers") entered into an Inventory
Agreement with Birmingham Southeast setting forth the terms of sale of certain
"Purchased Assets" to Birmingham Southeast. The sale of these Purchased Assets
occurred independent of the contribution of other assets pursuant to the
Contribution Agreement, and, upon executing these Inventory Agreements,
Birmingham Southeast became obligated to pay the purchase price set forth
therein within 60 days of December 2, 1996, which was the date of the
consummation of the transaction set forth in the Contribution Agreement (the
"Closing Date"). The Purchased Assets include all billets, finished goods and
supplies owned by the Sellers and located at the Cartersville Mill or Jackson
Mill, as more fully defined in the respective Inventory Agreements. Each Seller
is obligated to conduct a physical inventory for the purpose of indicating the
quantity and quality of its Purchased Assets and assigning a price to each item
of Purchased Assets. Prices are generally determined based on the lower of cost
or market value (adjusted in the case of finished goods for shipping, freight
and profit) of the item. Certain finished goods which meet the requisite
physical and chemical specifications, but which have been historically difficult
to sell, may be deemed "obsolete" and payment therefor withheld. If Birmingham
Southeast is unable to sell such obsolete finished goods for full price within
120 days following the Closing Date, Birmingham Southeast may purchase such
finished goods at scrap prices or return such finished goods to the Sellers
without payment therefor. Any dispute which arises under the Inventory Agreement
shall be referred to an independent auditor for resolution.
It is currently anticipated that Birmingham Southeast's
purchase price obligations payable to Atlantic under the Atlantic Inventory
Agreement is estimated to approximate $24,000,000, and Birmingham Southeast's
purchase price obligations payable to BSC under the BSC Inventory Agreement is
estimated to approximate $20,000,000.
Billet Supply Agreement. As of the Closing Date, Birmingham
Southeast took title to assets located in Cartersville, Georgia consisting
primarily of an operating melt shop. Prior to the Closing Date, Atlantic had
utilized billets which it produced in Cartersville in its rod mill located in
Atlanta, Georgia. Pursuant to the Billet Supply Agreement, Birmingham Southeast
agreed to continue to supply Atlantic with a minimum of 250,000 tons of billets
per year and a maximum of 300,000 tons of billet per year. In exchange, Atlantic
agreed to purchase the minimum quantity on a take or pay basis, which obligation
was guaranteed by Atlantic's parent company, IVACO. The billets sold and
purchased under this Billet Supply Agreement must conform to certain designated
physical and chemical specifications. The Billet Supply Agreement also
establishes an initial selling price for each grade of billet to be supplied
thereunder, which price is subject to adjustment to reflect increases or
decreases in the cost of scrap.
Administrative Services Agreement. On and after the Closing
Date, BSC has agreed to provide Birmingham Southeast with certain services and
to permit Birmingham Southeast to utilize certain assets owned by BSC. The
services to be provided to Birmingham Southeast include, among others, sales
support, legal services, environmental support services, personnel and human
resources, scrap purchasing and risk management services. The assets which BSC
has agreed to allow Birmingham Southeast to utilize include full extensive
insurance coverage, extensive employee benefit plans and programs provided
through third parties and a sophisticated computer and data processing system.
In exchange for BSC's provision of services and assets, Birmingham Southeast
shall pay to BSC a fixed fee, plus an amount equal to the allocable portion of
all costs of maintaining the insurance policies and employee benefit plans and
programs made available to Birmingham Southeast. In addition, BSC has agreed to
make advances to Birmingham Southeast from time to time (until October 31, 1997)
for general corporate and working capital purposes pursuant to a revolving
promissory note. The outstanding principal amount due under this note will vary
from time to time and will bear interest at a rate of 2% above prime, as
established by reference to the Wall Street Journal.
Management of BSC does not believe that the Inventory
Agreements, the Billet Supply Agreement or the Administrative Services Agreement
described above will have a material effect on BSC's results of operations and
financial condition.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this amendment to be signed on its behalf
by the undersigned, thereto duly authorized.
Dated as of January 15, 1997
BIRMINGHAM STEEL CORPORATION
By /s/ John M. Casey
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John M. Casey
Its: Executive Vice President
and Chief Financial Officer
