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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report: April 23, 1997
(Date of earliest event reported)
METAL MANAGEMENT, INC.
(Exact name of registrant as specified in the charter)
Delaware
(State or other 94-2835068
jurisdiction 0-14836 (IRS Employer
of incorporation) (Commission File No.) Identification No.)
500 Dearborn Street, Suite 405
Chicago, Illinois 60610
(Address of Principal Executive Offices)
(312) 645-0700
Registrant's telephone number including area code)
N/A
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
April 23, 1997 - Metal Management, Inc. (NASDAQ symbol MTLM) (the
"Company") today announced that as previously disclosed, the Company and Cozzi
Iron & Metal, Inc. ("Cozzi") have signed a binding Letter of Intent to merge
their respective companies, including Cozzi's interests in two joint ventures
with the Company as the surviving entity. The Company also announced today
that at the closing of this merger, the shareholders of Cozzi will likely
receive 11.5 million shares of the Company's common stock and $6 million in
cash. Further, at the effective time of the merger, the Company intends to
name Albert Cozzi as President and the Chief Operating Officer of the merged
company. T. Benjamin Jennings will remain Chairman of the Board and Chief
Development Officer, and Gerard M. Jacobs will remain the Chief Executive
Officer of the merged company. Frank Cozzi will be a Vice President of the
Company and President of the Cozzi operations. Contemporaneous with closing,
Albert and Frank Cozzi, as well as T. Benjamin Jennings and Gerard M. Jacobs,
anticipate entering into five-year employment agreements which would, among
other things, grant warrants to each individual to purchase 750,000 shares of
the Company's common stock. 375,000 of the warrants issued to each officer
would be exercisable at $5.91 per share and the remaining 375,000 warrants
would be exercisable at a price equal to 75% of the stock's closing price on
the day before the closing of the Cozzi merger. In addition, Albert, Frank and
Greg Cozzi and T. Benjamin Jennings and Gerard M. Jacobs intend to enter into a
ten-year agreement to, among other things, vote their respective shares in a
common fashion in regard to elections of directors and in certain other
circumstances. If the Cozzi merger is completed, these five individuals will
own, directly or indirectly, approximately 15.7 million shares of the Company's
common stock on a fully-diluted basis. Giving effect to the Cozzi merger, as of
March 31, 1997, the Company had approximately 27.3 million shares of common
stock on a fully-diluted basis.
Also, as previously announced, the Company, Proler Southwest, Inc., and
Proler Steelworks LLC ("Proler") have signed a binding Letter of Intent to
merge the three companies with the Company as the surviving entity. The
Company announced today that at the closing, the transaction would be effected
by the Company acquiring all of the equity interests in Proler Southwest, Inc.
and Proler Steelworks LLC in exchange for $15 million in cash, a $2 million
promissory note, 1.75 million shares of common stock in the Company and 375,000
warrants exercisable for 5 years at $6 per share. The Company anticipates
utilizing existing Proler management personnel to manage and oversee the
Houston and Gulf Coast region for the Company under the "Proler Southwest"
name.
The parties in both the Cozzi and Proler transactions are proceeding with
their due diligence investigations and negotiations of definitive agreements
and expect both mergers to close in the summer of 1997. The transactions are
subject to, among other things, execution of definitive merger agreements,
successful completion of due diligence, regulatory and corporate approvals and
other customary conditions. In addition, the Cozzi merger is subject to
approval of the Company's stockholders. Giving effect to the acquisitions of
Reserve (defined below), Cozzi (including joint venture revenues), and Proler,
the Company would have had annualized gross revenues in excess of $510 million
on a pro forma basis for the twelve months ended December 31, 1996.
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The Company previously announced the proposed purchase of Reserve Iron &
Metal Limited Partnership ("Reserve") through the purchase of all of the common
stock of P. Joseph Iron & Metal, Inc., an Ohio corporation ("PJIM") and the
sole general partner of Reserve, and all of the limited partnership units in
Reserve. The Company announced today that at the closing of the Company's
purchase of the common stock and limited partnership units, the Company will
deliver to the sellers a cash payment of $5,875,000 and a promissory note in
the amount of approximately $1.5 million. The Company also announced today
that, upon the closing of the Company's purchase of the common stock and
limited partnership units, the Company will enter into ten-year employment
agreements with the shareholders of PJIM for which Paul D. Joseph, Steven
Joseph and Scott Joseph will receive warrants to purchase up to 1,400,000
shares of common stock of the Company. These warrants have varying vesting
provisions, and their effective exercise prices will depend in part upon the
resolution of specified potential liabilities referred to in the following
paragraph. The Company also anticipates entering into employment agreements
with certain key employees of Reserve for which warrants to purchase an
aggregate of up to 175,000 shares of common stock of the Company will be
issued.
The Company also announced today that it has agreed, in principle, with
certain of the sellers to amend the Purchase Agreement for Reserve. Among
other matters, certain of the sellers of Reserve (the "Indemnifying Parties")
have agreed, in principle, to indemnify the Company and its affiliates against
a significant portion of specified potential liabilities. As is customary with
certain types of potential liabilities, Reserve's insurance carriers have
accepted the defense of Reserve, but have done so subject to reserving their
respective rights to deny coverage under certain circumstances. Assuming, for
hypothetical purposes, that insurance coverage would not be available or would
be inadequate, such potential liabilities, were they to become actual
liabilities, could be significant. Any amounts payable by the Indemnifying
Parties will be funded by reducing the purchase price note owed by the Company
and/or by increasing the exercise price on warrants to be issued to such
indemnifying parties as part of the original terms of the Purchase Agreement
and the ten-year employment agreements, respectively. With reference to these
certain potential liabilities, Reserve has advised the Company it believes it
has adequate insurance coverage and has denied any liability for these
potential liabilities. There can be no assurances, however, that Reserve will
not suffer actual liability or that it will have adequate insurance to cover
the liability.
The Company also announced that it is restating its second quarter results
for an accounting error at its subsidiary EMCO Recycling Corporation ("EMCO").
The accounting error occurred as a result of system processing problems
encountered as EMCO implemented a new management information system in
September 1996. The error resulted in an understatement of net loss of the
second quarter of approximately $368,000 or $.04 per share. MTLM will file
amended reports on Form 10-Q for the second and third quarters of fiscal 1997
as soon as practicable. MTLM anticipates filing its annual financial
statements for the fiscal year ended March 31, 1997 on a timely basis.
All of the statements made herein, other than historical facts, are
forward-looking statements made in reliance upon the Safe Harbor Provisions of
the Private Securities Litigation Reform Act
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of 1995. As such, they involve risks and uncertainties and are subject to
change at any time. These statements reflect the Company's current
expectations regarding the future profitability of the Company and its
subsidiaries and the benefits to be derived from the Company's execution of the
Company's industry consolidation strategy. There can be no assurance that the
Company's actual future performance or that of its subsidiaries will meet the
Company's expectations for growth and profitability. In addition, there are
no assurances that the transactions referred to in this release will be
completed, or that the potential liabilities referred to in this release will
not result in significant liability to the Company or its existing or to be
acquired subsidiaries. The statements in this report involve known and unknown
risks, uncertainties, and other factors which may cause actual results,
performance, or achievements to be materially different from any future results,
performance, or achievements expressed or implied by these forward-looking
statements. As discussed in the Company's quarterly report for the period
ended December 31, 1996, some of the factors which could affect the Company's
performance include, among other things: possible inability to replace short
term financing with longer term capital commitments, ability to obtain capital
through debt and/or equity placements sufficient to fund cash requirements
under acquisition and merger agreements, risk of expansion strategy,
cyclicality of operating results, price fluctuations, existing and future debt
of the Company, competition in the scrap metal industry, immediate and future
capital requirements, substantial leverage, reliance on management and
principal stockholders, and environmental matters.
Exhibits
99 Additional Exhibits
1) Press Release dated April 23, 1997
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
METAL MANAGEMENT, INC.
By:/s/ Gerard M. Jacobs
------------------------------------
Gerard M. Jacobs,
Dated April 30, 1997 President and Chief Executive Officer
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EXHIBIT 99.1
Exhibit No. 1
Chicago, IL - April 23, 1997 - Metal Management, Inc. (NASDAQ symbol MTLM) (the
"Company") today announced that as previously disclosed, the Company and Cozzi
Iron & Metal, Inc. ("Cozzi") have signed a binding Letter of Intent to merge
their respective companies, including Cozzi's interests in two joint ventures
with the Company as the surviving entity. The Company also announced today
that at the closing of this merger, the shareholders of Cozzi will likely
receive 11.5 million shares of the Company's common stock and $6 million in
cash. Further, at the effective time of the merger, the Company intends to
name Albert Cozzi as President and the Chief Operating Officer of the merged
company. T. Benjamin Jennings will remain Chairman of the Board and Chief
Development Officer, and Gerard M. Jacobs will remain the Chief Executive
Officer of the merged company. Frank Cozzi will be a Vice President of the
Company and President of the Cozzi operations. Contemporaneous with closing,
Albert and Frank Cozzi, as well as T. Benjamin Jennings and Gerard M. Jacobs,
anticipate entering into five-year employment agreements which would, among
other things, grant warrants to each individual to purchase 750,000 shares of
the Company's common stock. 375,000 of the warrants issued to each officer
would be exercisable at $5.91 per share and the remaining 375,000 warrants
would be exercisable at a price equal to 75% of the stock's closing price on
the day before the closing of the Cozzi merger. In addition, Albert, Frank and
Greg Cozzi and T. Benjamin Jennings and Gerard M. Jacobs intend to enter into a
ten-year agreement to, among other things, vote their respective shares in a
common fashion in regard to elections of directors and in certain other
circumstances. If the Cozzi merger is completed, these five individuals will
own, directly or indirectly, approximately 15.7 million shares of the Company's
common stock on a fully-diluted basis. Giving effect to the Cozzi merger, as of
March 31, 1997, the Company had approximately 27.3 million shares of common
stock on a fully-diluted basis.
Also, as previously announced, the Company, Proler Southwest, Inc., and
Proler Steelworks LLC ("Proler") have signed a binding Letter of Intent to
merge the three companies with the Company as the surviving entity. The
Company announced today that at the closing, the transaction would be effected
by the Company acquiring all of the equity interests in Proler Southwest, Inc.
and Proler Steelworks LLC in exchange for $15 million in cash, a $2 million
promissory note, 1.75 million shares of common stock in the Company and 375,000
warrants exercisable for 5 years at $6 per share. The Company anticipates
utilizing existing Proler management personnel to manage and oversee the
Houston and Gulf Coast region for the Company under the "Proler Southwest"
name.
The parties in both the Cozzi and Proler transactions are proceeding with
their due diligence investigations and negotiations of definitive agreements
and expect both mergers to close in the summer of 1997. The transactions are
subject to, among other things, execution of definitive merger agreements,
successful completion of due diligence, regulatory and corporate approvals and
other customary conditions. In addition, the Cozzi merger is subject to
approval of the Company's stockholders. Giving effect to the acquisitions of
Reserve (defined below), Cozzi (including joint venture revenues), and Proler,
the Company would have had annualized gross revenues in excess of $510 million
on a pro forma basis for the twelve months ended December 31, 1996.
1
<PAGE> 2
The Company previously announced the proposed purchase of Reserve Iron &
Metal Limited Partnership ("Reserve") through the purchase of all of the common
stock of P. Joseph Iron & Metal, Inc., an Ohio corporation ("PJIM") and the
sole general partner of Reserve, and all of the limited partnership units in
Reserve. The Company announced today that at the closing of the Company's
purchase of the common stock and limited partnership units, the Company will
deliver to the sellers a cash payment of $5,875,000 and a promissory note in
the amount of approximately $1.5 million. The Company also announced today
that, upon the closing of the Company's purchase of the common stock and
limited partnership units, the Company will enter into ten-year employment
agreements with the shareholders of PJIM for which Paul D. Joseph, Steven
Joseph and Scott Joseph will receive warrants to purchase up to 1,400,000
shares of common stock of the Company. These warrants have varying vesting
provisions, and their effective exercise prices will depend in part upon the
resolution of specified potential liabilities referred to in the following
paragraph. The Company also anticipates entering into employment agreements
with certain key employees of Reserve for which warrants to purchase an
aggregate of up to 175,000 shares of common stock of the Company will be
issued.
The Company also announced today that it has agreed, in principle, with
certain of the sellers to amend the Purchase Agreement for Reserve. Among
other matters, certain of the sellers of Reserve (the "Indemnifying Parties")
have agreed, in principle, to indemnify the Company and its affiliates against
a significant portion of specified potential liabilities. As is customary with
certain types of potential liabilities, Reserve's insurance carriers have
accepted the defense of Reserve, but have done so subject to reserving their
respective rights to deny coverage under certain circumstances. Assuming, for
hypothetical purposes, that insurance coverage would not be available or would
be inadequate, such potential liabilities, were they to become actual
liabilities, could be significant. Any amounts payable by the Indemnifying
Parties will be funded by reducing the purchase price note owed by the Company
and/or by increasing the exercise price on warrants to be issued to such
indemnifying parties as part of the original terms of the Purchase Agreement
and the ten-year employment agreements, respectively. With reference to these
certain potential liabilities, Reserve has advised the Company it believes it
has adequate insurance coverage and has denied any liability for these
potential liabilities. There can be no assurances, however, that Reserve will
not suffer actual liability or that it will have adequate insurance to cover
the liability.
The Company also announced that it is restating its second quarter results
for an accounting error at its subsidiary EMCO Recycling Corporation ("EMCO").
The accounting error occurred as a result of system processing problems
encountered as EMCO implemented a new management information system in
September 1996. The error resulted in an understatement of net loss of the
second quarter of approximately $368,000 or $.04 per share. MTLM will file
amended reports on Form 10-Q for the second and third quarters of fiscal 1997
as soon as practicable. MTLM anticipates filing its annual financial
statements for the fiscal year ended March 31, 1997 on a timely basis.
All of the statements in this release, other than historical facts, are
forward-looking statements made in reliance upon the Safe Harbor Provisions of
the Private Securities Litigation
2
<PAGE> 3
Reform Act of 1995. As such, they involve risks and uncertainties and are
subject to change at any time. These statements reflect the Company's current
expectations regarding the future profitability of the Company and its
subsidiaries and the benefits to be derived from the Company's execution of the
Company's industry consolidation strategy. There can be no assurance that the
Company's actual future performance or that of its subsidiaries will meet the
Company's expectations for growth and profitability. In addition, there are
no assurances that the transactions referred to in this release will be
completed, or that the potential liabilities referred to in this release will
not result in significant liability to the Company or its existing or to be
acquired subsidiaries. The statements in this press release involve known and
unknown risks, uncertainties, and other factors which may cause actual results,
performance, or achievements to be materially different from any future
results, performance, or achievements expressed or implied by these
forward-looking statements. As discussed in the Company's quarterly report for
the period ended December 31, 1996, some of the factors which could affect the
Company's performance include, among other things: possible inability to
replace short term financing with longer term capital commitments, ability to
obtain capital through debt and/or equity placements sufficient to fund cash
requirements under acquisition and merger agreements, risk of expansion
strategy, cyclicality of operating results, price fluctuations, existing and
future debt of the Company, competition in the scrap metal industry, immediate
and future capital requirements, substantial leverage, reliance on management
and principal stockholders, and environmental matters.
3
