SCHEDULE 14A
(RULE 14A-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant {X}
Filed by a Party other than the Registrant { }
Check the appropriate box:
{ } 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
BIRMINGHAM STEEL CORPORATION
---------------------------------------------------------
(Name of Registrant as specified in its charter)
----------------------------
(Name of person(s) filing proxy statement, if other than 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:
(4) Proposed maximum aggregate value of transactions:
(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:
Contacts: Roy Winnick/Roanne Kulakoff
Kekst and Company
212-521-4842 or 4837
BIRMINGHAM STEEL CORPORATION REPORTS
STRONG FIRST-QUARTER RESULTS
- ----------------------------------------------------------------------------
COMPANY'S NET PROFIT, DESPITE CONTINUING DIFFICULT INDUSTRY ENVIRONMENT,
REFLECTS STRENGTH OF ITS CORE OPERATIONS
Company completes long-term financing arrangements with its lenders
Annual Meeting scheduled to take place in Orlando, Florida, on December 2
BIRMINGHAM, Ala. (October 14, 1999) - Reflecting the strength of its core
mini-mill and scrap operations, Birmingham Steel Corporation (NYSE: BIR)
today reported a net profit for its first fiscal quarter ended September
30, 1999. The Company achieved net income of $5,766,000, or $0.19 per
share, which included start-up expenses related to the new rolling mill in
Cartersville, Georgia, of $4,497,000, or $0.09 per share. Excluding
start-up expenses and unusual items, net income was $0.28 per share, versus
$0.30 per share on a comparable basis in the first fiscal quarter last
year.
For the prior-year quarter, the Company reported net income from continuing
operations of $10,926,000, or $0.37 per share. Pre-operating start-up
expenses associated with the Cartersville project in the prior-year quarter
were $1,343,000, or approximately $0.03 per share. Net income in the
prior-year quarter also included pre-tax gains of $5.1 million, or $0.10
per share, from the sale of property and income from settlements with
electrode suppliers.
Reflecting continued high import levels, net sales for the first quarter of
the current fiscal year were $176.8 million, versus $207.5 million in the
same period last year. Steel shipments for the current-year quarter were
642,000 tons, versus 656,000 tons in the prior-year period. Shipments in
the prior-year quarter included approximately 66,000 tons of semi-finished
billet shipments from the Cartersville facility, compared with billet
shipments of 8,000 tons in the current-year quarter. Since start-up of the
new mid-section mill in March, most of the Cartersville billet production
is now consumed internally.
Robert A. Garvey, Chairman and Chief Executive Officer of Birmingham Steel
Corporation, said, "We are very pleased with the strong first-quarter
financial performance of our core mini-mill and scrap operations. As we
have previously stated, these operations are fundamentally sound and
profitable. Despite continued pressures on steel shipments and selling
prices caused by continued high import levels, our core operations achieved
internal earnings targets."
Garvey continued, "The first-quarter results clearly indicate the soundness
of the strategic restructuring that we announced on August 18, and that we
are now aggressively implementing. We are confident that the core
operations of Birmingham Steel provide the best platform to enhance the
Company's profitability and to achieve our overriding objective of building
shareholder value."
On August 18, 1999, the Company announced a strategic restructuring
pursuant to which the Company is seeking to divest its SBQ (special bar
quality) operations, which include its 50% interest in American Iron
Reduction, and its 50% investment in an unprofitable West Coast scrap joint
venture. In the Company's financial results for the fourth quarter and
fiscal year ended June 30, 1999, the Company recorded charges associated
with the strategic restructuring, including a provision for estimated
operating losses to be incurred by the SBQ operations until disposal. In
accordance with generally accepted accounting principles ("GAAP"), the SBQ
operations are presented as discontinued operations and losses from these
operations are charged against a reserve included in the Company's balance
sheet. For the quarter ended September 30, 1999, the Company did not record
any additional charges in connection with discontinued operations.
The Company also announced that it has reached a definitive agreement with
its lenders regarding modifications of its various debt agreements to
provide for availability of funds under the Company's outstanding debt
facilities. The Company previously stated that modifications to certain of
its principal debt agreements were required as a result of the fiscal 1999
operating losses attributable to the SBQ operations, as well as the
Company's decision to pursue the strategic restructuring.
The new agreement, signed on October 13, 1999, supersedes the previously
announced interim financing accord announced by the Company on September
29, 1999, which had provided availability of $235 million through December
28, 1999. Under the new accord, the Company's availability will be
increased to a maximum of $300 million effective January 1, 2000. The new
financing arrangement will result in higher interest costs to the Company
and is secured by a collateral package that includes substantially all of
the Company's assets. The Company said that, in accordance with GAAP, it
expected to record in its financial results for the second quarter ending
December 31, 1999, an after-tax charge of approximately $1.3 million, or
approximately $0.04 per share, related to the debt refinancing.
Garvey commented, "We are pleased to have successfully completed the
necessary modifications to our long-term financing arrangements, and we
appreciate the continued support by our banks and senior noteholders. We
expect that the new financing arrangements will provide the Company with
sufficient availability to meet our future operating needs and to complete
the strategic restructuring."
Garvey continued, "As reflected in the agreement with its lenders, the
Company continues to face challenges as a result of its current debt
levels. However, we are committed to overcoming these challenges by taking
steps to optimize our core operations and complete the strategic
restructuring in a timely manner. The successful completion of the
restructuring should allow the Company to reduce debt and provide greater
strategic, operational and financial flexibility."
The Company said it filed its Annual Report on Form 10-K with the
Securities and Exchange Commission yesterday. The Company had previously
announced that it had filed for a statutory 15-day extension to file its
Form 10-K in order to provide time to complete negotiations with its
lenders.
Separately, the Company announced that its Annual Meeting of Stockholders,
which as previously announced is scheduled to be held on December 2, will
take place at 10 a.m., local time, on that date, and will be held at the
Peabody Orlando Hotel, 9801 International Drive, Orlando, Florida.
Birmingham Steel operates in the mini-mill sector of the steel industry and
conducts operations at facilities located across the United States. The
common stock of Birmingham Steel is traded on the New York Stock Exchange
under the symbol "BIR."
Except for historical information, the matters described in this press
release are forward-looking statements within the meaning of the
safe-harbor provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially, including
economic conditions, market demand factors, equipment breakdowns ore
failures, Birmingham Steel's success in implementing the restructuring
plan, the Company's continued compliance with its financing arrangements
and its principal debt agreements, as well as other risks described from
time to time in the Company's periodic and special filings with the
Securities and Exchange Commission. Any forward-looking statements
contained in this document speak only as of the date hereof, and the
Company disclaims any intent or obligation to update such forward-looking
statements.
Birmingham Steel Corporation (the "Company") and certain other persons
named below may be deemed to be participants in the solicitation of proxies
in connection with the 1999 annual meeting of shareholders. The
participants in this solicitation may include the directors of the Company
(William J. Cabaniss, Jr., C. Stephen Clegg, Alfred C. DeCrane, Jr., E.
Mandell de Windt, Robert A. Garvey, E. Bradley Jones, Robert D. Kennedy,
Richard de J. Osborne and John H. Roberts) and the following executive
officers, members of management and employees of the Company: Robert A.
Garvey (Chairman and Chief Executive Officer), Brian F. Hill (Chief
Operating Officer), Kevin E. Walsh (Executive Vice President - Chief
Financial Officer), William R. Lucas, Jr. (Managing Director - Southern
Region), Jack R. Wheeler (Managing Director - Northern Region), Raymond J.
Lepp (Managing Director - Western Region), J. Daniel Garrett (Vice
President - Finance & Control), Catherine W. Pecher (Vice President -
Administration & Corporate Secretary), Charles E. Richardson III (General
Counsel), Philip L. Oakes (Vice President - Human Resources), W. Joel White
(Vice President - Information Technology) and Robert G. Wilson (Vice
President - Business Development). As of the date of this communication,
none of the foregoing participants individually owned in excess of 1
percent of the Company's common stock or in the aggregate in excess of 3
percent of the Company's common stock.
The Company has retained Credit Suisse First Boston Corporation ("CSFB")
and Banc of America Securities LLC ("BAS") to act as its financial
advisors, for which CSFB and BAS will receive customary fees, as well as
reimbursement of reasonable out-of-pocket-expenses. In addition, the
Company has agreed to indemnify CSFB, BAS and certain related persons
against certain liabilities, including liabilities under federal securities
laws, arising out of their engagement. Each of CSFB and BAS are investment
banking firms that provide a full range of financial services for
institutional and individual clients. Neither CSFB nor BAS admit that it or
any of its directors, officers or employees is a "participant," as defined
in Schedule 14A promulgated under the Securities Exchange Act of 1934, as
amended, in the solicitation, or that Schedule 14A requires the disclosure
of certain information concerning CSFB and BAS, and the following
investment banking employees of CSFB or BAS, as the case may be, may
communicate in person, by telephone or otherwise with a limited number of
institutions, brokers or other persons who are stockholders of the Company:
Peter R. Matt, William C. Sharpstone and Murari S. Rajan of CSFB; and Gidon
Y. Cohen, Shawn B. Welch and Sumner T. Farren of BAS. In the normal course
of their business, both CSFB and BAS regularly buy and sell securities
issued by the Company for their own account and for the accounts of their
respective customers, which transactions may result in CSFB, BAS or their
respective associates having a net "long" or net "short" position in the
Company's securities, or option contracts of other derivatives in or
relating to such securities. As of October 12, 1999, CSFB had a net short
position of 100 shares of the Company's common stock and as of September 8,
1999, BAS had a net long position of 242,224 shares of the Company's common
stock.
[Table follows]
BIRMINGHAM STEEL CORPORATION
Financial Highlights
(in 000s except for share and per share data)
Three Months Ended September 30,
--------------------------------------
1999 1998
--------------------------------------
Revenues $ 176,802 $ 207,502
Net Income $ 5,766 $ 10,926
Earnings per share $ 0.19 $ 0.37
Earnings per share, excluding
start-up costs and unusual items $ 0.28 $ 0.30
Average shares outstanding 29,704,921 29,283,996
# # #
