<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 6, 1998
REGISTRATION NO. 333-58875
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
METAL MANAGEMENT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5090 94-2835068
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
500 NORTH DEARBORN STREET, SUITE 405, CHICAGO, ILLINOIS 60610
(312) 645-0700
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
AEROSPACE METALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5090 36-4201748
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
500 FLATBUSH AVENUE, HARTFORD, CONNECTICUT 06141
(860) 522-3123
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
AMERICAN SCRAP PROCESSING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ILLINOIS 5090 36-3197180
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
2232 SOUTH BLUE ISLAND AVENUE, CHICAGO, ILLINOIS 60608
(773) 254-1200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
BRIQUETTING CORPORATION OF AMERICA
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
OHIO 5090 34-1717995
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
1645 INDIAN WOOD CIRCLE, MAUMEE, OHIO 43537
(419) 891-4100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
CALIFORNIA METALS RECYCLING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
CALIFORNIA 5090 95-3297588
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
9309 RAYO AVENUE, SOUTHGATE, CALIFORNIA 90280
(213) 567-7767
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
<PAGE> 2
CHARLES BLUESTONE COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
PENNSYLVANIA 5090 25-1071576
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
2045 LINCOLN BOULEVARD, ELIZABETH, PENNSYLVANIA 15037
(412) 384-7400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
CIM TRUCKING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ILLINOIS 5090 36-4035047
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
2232 SOUTH BLUE ISLAND AVENUE, CHICAGO, ILLINOIS 60608
(773) 254-1200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
COMETCO CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ILLINOIS 5090 36-3199694
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
2232 SOUTH BLUE ISLAND AVENUE, CHICAGO, ILLINOIS 60608
(773) 254-1200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
COZZI BUILDING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ILLINOIS 5090 36-2588600
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
2232 SOUTH BLUE ISLAND AVENUE, CHICAGO, ILLINOIS 60608
(773) 254-1200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
COZZI IRON & METAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ILLINOIS 5090 36-2582686
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
2232 SOUTH BLUE ISLAND AVENUE, CHICAGO, ILLINOIS 60608
(773) 254-1200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
C SHREDDING CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ILLINOIS 5090 36-3716605
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
2232 SOUTH BLUE ISLAND AVENUE, CHICAGO, ILLINOIS 60608
(773) 254-1200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
EMCO TRADING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ARIZONA 5090 86-0749343
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
3700 WEST LOWER BUCKEYE ROAD, PHOENIX, ARIZONA 85009
(602) 447-3000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
<PAGE> 3
FERREX TRADING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5090 34-1627973
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
1645 INDIAN WOOD CIRCLE, MAUMEE, OHIO 43537
(419) 891-4100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
FIRMA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
CALIFORNIA 5090 95-3876436
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
9309 RAYO AVENUE, SOUTHGATE, CALIFORNIA 90280
(213) 567-7767
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
FIRMA PLASTIC CO., INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
CALIFORNIA 5090 95-4316294
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
9309 RAYO AVENUE, SOUTHGATE, CALIFORNIA 90280
(213) 567-7767
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
HOUSTON COMPRESSED STEEL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
TEXAS 5090 74-0693472
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
90 HIRSCH ROAD, HOUSTON, TEXAS 77029
(713) 671-2900
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
HOUTEX METALS COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
TEXAS 5090 74-2069895
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
90 HIRSCH ROAD, HOUSTON, TEXAS 77029
(713) 671-2900
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
THE ISAAC CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
OHIO 5090 34-0901723
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
1645 INDIAN WOOD CIRCLE, MAUMEE, OH 43537
(419) 891-4100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
KANKAKEE SCRAP CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ILLINOIS 5090 36-2657218
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
1000 NORTH WASHINGTON AVENUE, KANKAKEE, ILLINOIS 60901
(815) 933-5011
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
<PAGE> 4
KIMERLING ACQUISITION CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5090 36-4218674
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
2020 VANDERBILT ROAD, BIRMINGHAM, ALABAMA 35234
(205) 841-6706
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
MAC LEOD METALS CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
CALIFORNIA 5090 95-2588260
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
9309 RAYO AVENUE, SOUTHGATE, CALIFORNIA 90280
(213) 567-7767
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
METAL MANAGEMENT ARIZONA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ARIZONA 5090 86-0730945
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
3700 WEST LOWER BUCKEYE ROAD, PHOENIX, ARIZONA 85009
(602) 447-3000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
METAL MANAGEMENT GULF COAST, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5090 76-0570379
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
12440 SEAWAY ROAD, GULFPORT, MISSISSIPPI 39503
(228) 868-1764
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
METAL MANAGEMENT REALTY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ARIZONA 5090 74-2783185
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
3700 WEST LOWER BUCKEYE ROAD, PHOENIX, ARIZONA 85009
(602) 447-3000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
MICHAEL SCHIAVONE & SONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5090 06-1516622
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
234 UNIVERSAL DRIVE, NORTH HAVEN, CONNECTICUT 06473
(203) 782-4200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
NAPORANO IRON & METAL CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
NEW JERSEY 5090 22-1449923
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)E
</TABLE>
P.O. BOX 5158, FOOT OF HAWKINS STREET, NEWARK, NEW JERSEY 07105
(973) 344-4570
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
<PAGE> 5
NEWELL RECYCLING WEST, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
COLORADO 5090 84-0888787
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
5601 YORK STREET, P.O. BOX 16612, DENVER, COLORADO 80216
(303) 295-2911
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
NICROLOY ACQUISITION CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5090 15-5369538
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
C/O FEDERAL ALLOY CORPORATION, 2600 CHARTIERS AVENUE, PITTSBURGH, PENNSYLVANIA
15204
(412) 331-2100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
NIMCO SHREDDING CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
NEW JERSEY 5090 22-1986545
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
P.O. BOX 5158, FOOT OF HAWKINS STREET, NEWARK, NEW JERSEY 07105
(973) 344-4570
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
138 SCRAP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ILLINOIS 5090 36-4226684
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
1201 WEST 138TH, RIVERDALE, ILLINOIS 60827
(708) 389-0960
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
PAULDING RECYCLING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
OHIO 5090 34-1844945
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
1645 INDIAN WOOD CIRCLE, MAUMEE, OHIO 43537
(419) 891-4100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
P. JOSEPH IRON & METAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
OHIO 5090 34-1655550
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
4431 WEST 130TH STREET, CLEVELAND, OHIO 44135
(216) 671-3000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
PROLER SOUTHWEST INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
TEXAS 5090 76-0378431
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
90 HIRSCH ROAD, HOUSTON, TEXAS 77029
(713) 671-2900
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
<PAGE> 6
PROLER STEELWORKS L.L.C.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5090 64-0850641
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
90 HIRSCH ROAD, HOUSTON, TEXAS 77029
(713) 671-2900
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
R&P HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5090 25-1619177
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
2045 LINCOLN BOULEVARD, ELIZABETH, PENNSYLVANIA 15037
(412) 384-4700
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
R&P REAL ESTATE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
PENNSYLVANIA 5090 25-1605103
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
2045 LINCOLN BOULEVARD, ELIZABETH, PENNSYLVANIA 15037
(412) 384-7400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
RESERVE IRON & METAL LIMITED PARTNERSHIP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5090 34-1658201
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
4431 WEST 130TH STREET, CLEVELAND, OHIO 44135
(216) 671-3000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
SALT RIVER RECYCLING, L.L.C.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ARIZONA 5090 86-0819529
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
3640 SOUTH 35TH AVENUE, PHOENIX, ARIZONA 85009
(602) 278-6211
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
SCRAP PROCESSING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ILLINOIS 5090 36-3588940
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
2232 SOUTH BLUE ISLAND AVENUE, CHICAGO, ILLINOIS 60608
(773) 254-1200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
SUPERIOR FORGE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5090 76-0519943
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
5302 OCEANUS DRIVE, HUNTINGTON BEACH, CALIFORNIA 92649
(714) 891-0900
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
<PAGE> 7
TORRINGTON SCRAP COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5090 06-1516623
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
234 UNIVERSAL DRIVE, NORTH HAVEN, CONNECTICUT 06473
(203) 782-4200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
TROJAN TRADING CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
CALIFORNIA 5090 95-4327581
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
9309 RAYO AVENUE, SOUTHGATE, CALIFORNIA 90280
(213) 567-7767
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
USA SOUTHWESTERN CARRIER, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ARIZONA 5090 86-0749056
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
3700 WEST LOWER BUCKEYE ROAD, PHOENIX, ARIZONA 85009
(602) 447-3000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
DAVID A. CARPENTER
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
METAL MANAGEMENT, INC.
500 NORTH DEARBORN STREET, SUITE 405
CHICAGO, ILLINOIS 60610
(312) 645-0700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
Copies to:
PAUL W. THEISS
MAYER, BROWN & PLATT
190 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603-3441
(312) 782-0600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effectiveness of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION
8(A), MAY DETERMINE.
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<PAGE> 8
PROSPECTUS
METAL MANAGEMENT, INC.
OFFER TO EXCHANGE
ALL 10% SENIOR SUBORDINATED NOTES DUE 2008
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 FOR ALL OUTSTANDING
10% SENIOR SUBORDINATED NOTES DUE 2008
($180,000,000 PRINCIPAL AMOUNT OUTSTANDING)
The Exchange Offer (as defined) and withdrawal rights will expire at 5:00
p.m., New York City time, on November 5, 1998 (as such date may be extended (but
not beyond November 19, 1998), the "Expiration Date"). See "The Exchange
Offer--Expiration Date; Extensions; Amendments."
Metal Management, Inc., a Delaware corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus, as it may be amended and supplemented from time to time (the
"Prospectus"), and the accompanying Letter of Transmittal (the "Letter of
Transmittal," and together with the Prospectus, the "Exchange Offer"), to
exchange an aggregate of up to $180,000,000 principal amount of 10% Senior
Subordinated Notes due 2008 (the "New Notes"), which have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
registration statement of which this Prospectus forms a part, for an identical
face amount of the Company's issued and outstanding 10% Senior Subordinated
Notes due 2008 (the "Old Notes") (the Old Notes and the New Notes are
collectively referred to herein as the "Notes") from the holders thereof in
integral multiples of $1,000. See "The Exchange Offer."
The Company will accept for exchange any and all Old Notes that are validly
tendered prior to 5:00 p.m., New York City time, on the Expiration Date. Tenders
of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City
time, on the Expiration Date, otherwise such tenders are irrevocable. The
Exchange Offer is not conditioned upon any minimum principal amount of the Old
Notes being tendered for exchange. However, the Exchange Offer is subject to
certain customary conditions and to the terms and provisions of the Exchange and
Registration Rights Agreement, dated as of May 13, 1998 (the "Registration
Rights Agreement"), among the Company, the Guarantors (as defined herein) and
Goldman, Sachs & Co., BT Alex. Brown Incorporated and Salomon Brothers Inc
(collectively, the "Initial Purchasers"). See "The Exchange Offer."
(continued on next page)
------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR A DISCUSSION OF CERTAIN RISKS THAT
SHOULD BE CONSIDERED BY HOLDERS IN EVALUATING THE EXCHANGE OFFER.
------------------
THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------
The date of this Prospectus is October 7, 1998.
<PAGE> 9
An aggregate of $180 million principal amount of Old Notes were sold by the
Company to the Initial Purchasers on May 13, 1998 (the "Closing Date") without
registration under the Securities Act, in reliance upon exemptions therefrom,
pursuant to a Purchase Agreement, dated May 8, 1998 (the "Purchase Agreement"),
among the Company, the Guarantors and the Initial Purchasers. The Company has
been advised that the Initial Purchasers subsequently resold the Old Notes in
reliance on Rule 144A under the Securities Act ("Rule 144A") and Regulation S
under the Securities Act ("Regulation S"). The Company and the Initial
Purchasers also entered into the Registration Rights Agreement, pursuant to
which the Company granted certain registration rights for the benefit of the
holders of the Old Notes (the "Holders").
The Old Notes were, and the New Notes will be, issued under the Indenture,
dated as of May 13, 1998 (the "Indenture"), among the Company, the Guarantors
and LaSalle National Bank, as trustee (in such capacity, the "Trustee"). As of
the date of this Prospectus, there are $180,000,000 aggregate principal amount
of Old Notes outstanding. The form and terms of the New Notes will be identical
in all material respects to the form and terms of the Old Notes, except that (i)
the New Notes have been registered under the Securities Act and, therefore, will
not bear legends restricting the transfer thereof, (ii) holders of New Notes
will not be entitled to receive any liquidated damages ("Liquidated Damages")
thereon pursuant to certain circumstances under the Registration Rights
Agreement and (iii) holders of New Notes will no longer be entitled to certain
other rights under the Registration Rights Agreement.
Interest on the Notes is payable semi-annually in arrears on each May 15
and November 15, commencing on November 15, 1998. Holders whose Old Notes are
accepted for exchange will have the right to receive interest accrued thereon
from the date of their original issuance or the last interest payment date, as
applicable, to, but not including, the date of issuance of the New Notes, such
interest to be payable with the first interest payment on the New Notes.
Interest on the Old Notes accepted for exchange will cease to accrue on the day
prior to the issuance of the New Notes. The New Notes will mature on May 15,
2008. See "Description of the New Notes--Principal, Maturity and Interest."
The New Notes will be redeemable at the option of the Company, in whole or
in part, at any time on or after May 15, 2003, at the redemption prices set
forth herein, plus accrued and unpaid interest thereon, if any, to the date of
redemption. In addition, on or prior to May 15, 2001, the Company may redeem up
to 35% of the originally issued aggregate principal amount of the Notes, at a
redemption price of 110% of the principal amount thereof, plus accrued and
unpaid interest thereon, if any, to the redemption date, with the net proceeds
of an Equity Offering (as defined herein); provided, that not less than $117.0
million in aggregate principal amount of New Notes is outstanding immediately
after giving effect to such redemption. Following the occurrence of a Change of
Control (as defined herein), the Company will be required to make an offer to
repurchase the New Notes at a price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the date of
purchase. See "Description of the New Notes--Optional Redemption" and
"--Repurchase at the Option of Holders--Change of Control."
The New Notes will represent unsecured senior subordinated obligations of
the Company and will be subordinated in right of payment to all existing and
future Senior Debt (as defined herein) of the Company. The New Notes will be
fully and unconditionally guaranteed (the "Guarantee") on an unsecured senior
subordinated basis by the Guarantors, each a wholly-owned subsidiary of the
Company. As of September 30, 1998, the Company had approximately $165.0 million
of Senior Debt outstanding.
The New Notes are being offered hereby in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement. The
Company is making the Exchange Offer in reliance on the position of the staff of
the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, the Company has not sought its own interpretive letter and there can be
no assurance that the staff of the Commission would make a similar determination
with respect to the Exchange Offer as it has in such interpretive letters to
third parties. Based on these interpretations by the staff of the Commission,
the Company believes that New Notes issued pursuant to the Exchange Offer to a
holder in exchange for Old Notes may be offered for resale, resold and otherwise
transferred by a holder (other than (i) a broker-dealer who purchased Old Notes
directly from the Company for resale pursuant to Rule 144A or any other
available exemption under the Securities Act, (ii) an
i
<PAGE> 10
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act, or (iii) a broker-dealer who acquired the Old Notes as a result of
market-making or other trading activities), without further compliance with the
registration and prospectus delivery provisions of the Securities Act, provided,
that such holder is acquiring the New Notes in the ordinary course of business
and is not participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of the Securities
Act) of the New Notes. Holders wishing to accept the Exchange Offer must
represent to the Company, as required by the Registration Rights Agreement, that
such conditions have been met. Any holder of Old Notes who is not able to rely
on the interpretations of the staff of the Commission set forth in the
above-mentioned interpretive letters must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
sale or other transfer of such Old Notes unless such sale is made pursuant to an
exemption from such requirements. See "The Exchange Offer--Resales of New
Notes."
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it acquired the Old Notes for its own
account as a result of market-making activities or other trading activities and
must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken by the staff of the
Commission in the interpretive letters referred to above, the Company believes
that broker-dealers who acquired Old Notes for their own accounts as a result of
market-making or other trading activities ("Restricted Broker-Dealers") may
fulfill their prospectus delivery requirements with respect to the New Notes
received upon exchange of such Old Notes (other than Old Notes which represent
an unsold allotment from the original sale of the Old Notes) with a prospectus
meeting the requirements of the Securities Act, which may be the prospectus
prepared for an exchange offer so long as it contains a description of the plan
of distribution with respect to the resale of such New Notes. Accordingly, the
Company believes that this Prospectus, as it may be amended or supplemented from
time to time, may be used by a Restricted Broker-Dealer in connection with
resales of New Notes received in exchange for Old Notes where such Old Notes
were acquired by such Restricted Broker-Dealer for its own account as a result
of market-making or other trading activities. Subject to certain provisions set
forth in the Registration Rights Agreement, the Company has agreed that this
Prospectus may be used by a Restricted Broker-Dealer in connection with resales
of such New Notes. See "Plan of Distribution." However, a Restricted
Broker-Dealer who intends to use this Prospectus in connection with the resale
of New Notes received in exchange for Old Notes pursuant to the Exchange Offer
must notify the Company, or cause the Company to be notified, on or prior to the
Expiration Date, that it is a Restricted Broker-Dealer. Such notice may be given
in the space provided for that purpose in the Letter of Transmittal or may be
delivered to the Exchange Agent at one of the addresses set forth herein under
"The Exchange Offer--Exchange Agent; Assistance." Any Restricted Broker-Dealer
who is an "affiliate" of the Company may not rely on such interpretive letters
and must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. See "The Exchange
Offer--Resales of New Notes."
In that regard, each Restricted Broker-Dealer who surrenders Old Notes
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company of the
occurrence of any event or the discovery of any fact which makes any statement
contained in this Prospectus untrue in any material respect or which causes this
Prospectus to omit to state a material fact necessary in order to make the
statements contained herein, in light of the circumstances under which they were
made, not misleading or of the occurrence of certain other events specified in
the Registration Rights Agreement, such Restricted Broker-Dealer will suspend
the sale of New Notes pursuant to this Prospectus until the Company has amended
or supplemented this Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to such Restricted
Broker-Dealer or the Company has given notice that the sale of the New Notes may
be resumed, as the case may be.
The New Notes issued pursuant to this Exchange Offer will be issued in the
form of a Global New Note (as defined herein), which will be deposited with, or
on behalf of, The Depository Trust Company ("DTC") and registered in its name or
in the name of Cede & Co., its nominee. Beneficial interests in the Global New
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<PAGE> 11
Note representing the New Notes will be shown on, and transfers thereof will be
effected through, records maintained by DTC and its participants.
Notwithstanding the foregoing, Old Notes held in certificated form, if any, will
be exchanged solely for Certificated New Notes (as defined herein). After the
initial issuance of the Global New Note, Certificated New Notes will be issued
in exchange for interests in the Global New Note only on the terms set forth in
the Indenture. See "Description of the New Notes."
The Company will not receive any proceeds from this offering, but, pursuant
to the Registration Rights Agreement, the Company will bear certain registration
expenses. No underwriter is being utilized in connection with the Exchange
Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD NOTES ARE URGED TO READ THIS PROSPECTUS AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR
OLD NOTES PURSUANT TO THE EXCHANGE OFFER.
iii
<PAGE> 12
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder, and, in accordance therewith, files reports,
proxy and information statements and other information with the Commission. Such
reports, proxy and information statements and other information concerning the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and Seven
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates, and from the Commission's worldwide web site at http://www.sec.gov. The
Company's common stock, par value $.01 per share ("Common Stock"), is currently
traded on NASDAQ. Information filed by the Company with NASDAQ may be inspected
through EDGAR, the Commission's on-line filing service.
This Prospectus constitutes a part of a registration statement on Form S-4
(together with all amendments and exhibits, the "Registration Statement") filed
by the Company with the Commission under the Securities Act. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. The information so omitted may be obtained from the
Commission's principal office in Washington, D.C. upon payment of the fees
prescribed by the Commission and from the Commission's worldwide web site.
Statements contained herein concerning the provisions of any document provide a
description of the material terms of the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is subject to and qualified in its entirety by such
reference. Reference is made to such Registration Statement and to the exhibits
relating thereto for further information with respect to the Company and the
securities offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference (Commission File No. 0-14836):
1. The Company's Annual Report on Form 10-K for the year ended March 31,
1998.
2. The Company's Proxy Statement dated November 20, 1997 (relating to the
acquisition of Cozzi Iron & Metal, Inc. and including historical and
pro forma financial statements).
3. The Company's Current Report on Form 8-K dated March 31, 1998
(describing the Company's Senior Credit Facility).
4. The Company's Quarterly Report on Form 10-Q/A for the quarter ended
December 31, 1997.
5. The Company's Current Report on Form 8-K dated May 1, 1998 (relating
to the acquisition of Aerospace Metals, Inc. and its consolidated
subsidiaries and including historical and pro forma financial
statements).
6. The Company's Current Report on Form 8-K dated May 1, 1998 (relating
to risk factors that could affect the Company's future financial
condition).
7. The Company's Current Report on Form 8-K dated May 13, 1998 (relating
to the sale by the Company of the Old Notes).
8. The Company's Current Report on Form 8-K dated July 1, 1998 (providing
supplementary consolidated financial statements of the Company that
give effect to the Company's merger with R&P Holdings, Inc. accounted
as a pooling of interests).
9. The Company's Current Report on Form 8-K (and amendment thereto on
Form 8-K/A) dated July 1, 1998 (relating to the acquisition of
Naporano Iron & Metal Co. and including historical and pro forma
financial statements).
iv
<PAGE> 13
10. The Company's Quarterly Report on Form 10-Q (and amendment thereto on
Form 10-Q/A) for the quarter ended June 30, 1998.
11. The Company's Current Report on Form 8-K dated October 5, 1998
(providing consolidated financial statements of the Company that give
effect to the Company's merger with R&P Holdings, Inc. accounted as a
pooling of interests and reporting certain amendments to the Company's
$250 million Senior Credit Facility).
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the Expiration Date shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained in any other
subsequently filed document which also is incorporated or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
and superseded, to constitute a part of this Prospectus.
The making of a modifying or superseding statement shall not be deemed an
admission that the modified or superseded statement, when made, constituted a
misrepresentation, as untrue statement of material fact or an omission to state
a material fact that is required to be stated or that is necessary to make a
statement not misleading in light of the circumstances in which it was made.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, on the written or oral request of any such person, a copy of any or
all of the documents referred to above which have been or may be incorporated by
reference in this Prospectus, other than exhibits to such documents. Written or
telephonic requests for such documents should be directed to Metal Management,
Inc., 500 North Dearborn Street, Suite 405, Chicago, Illinois 60610, Attention:
David A. Carpenter, Vice President, General Counsel and Secretary (telephone
number: 312-645-0700). In order to assure timely delivery of the documents, any
request should be made not later than five business days prior to the Expiration
Date.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Prospectus under "Prospectus Summary,"
in addition to certain statements contained elsewhere in this Prospectus,
including statements qualified by the words "believes", "intends",
"anticipates", "expects" and words of similar import, are "forward-looking
statements" made in reliance upon the Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995, and are thus prospective. 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 its industry consolidation strategy. As
discussed in the Company's Annual Report on Form 10-K, filed June 23, 1998, some
of the factors which could affect the Company's performance include, among other
things; the effects of leverage on the Company, immediate and future capital
requirements, risk of dilution to existing shareholders, potential inability to
control growth or to successfully integrate acquired businesses, limited
operating history, cyclicality of the metals recycling industry, potential
inability to complete pending acquisitions, commodity price fluctuations,
compliance with environmental, health and safety and other regulatory
requirements applicable to the Company, potential environmental liability, risk
of deterioration in relations with labor unions, control by principal
stockholders and dependence on key management, dependence on suppliers of scrap
metals, concentration of customer risk, competition in the scrap metals
industry, availability of scrap alternatives, stock market volatility and year
2000 compliance. All such forward-looking statements are subject to such risks,
uncertainties and other factors that could cause actual results to differ
materially from future results expressed or implied by such forward-looking
statements. These and other risks, uncertainties and other factors are discussed
under the heading "Risk Factors." Holders of Notes are urged to carefully
consider such factors.
v
<PAGE> 14
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information, including the historical and
pro forma financial statements and the notes thereto, appearing elsewhere in
this Prospectus. Unless otherwise indicated, all references in this Prospectus
to "Metal Management" or the "Company" refer to Metal Management, Inc., a
Delaware corporation, and its direct and indirect consolidated subsidiaries.
THE COMPANY
INTRODUCTION
Metal Management is one of the largest and fastest-growing full-service
metals recyclers in the United States, with 59 recycling facilities in 14
states. The Company is a leading consolidator in the metals recycling industry
and has achieved this position primarily through the implementation of its
national strategy of completing and integrating regional acquisitions. The
Company believes that its consolidation strategy will enhance the competitive
position and profitability of the operations that it acquires through improved
managerial and financial resources and increased economies of scale. Since
entering the recycling industry in April 1996, and giving effect to the
Company's merger, accounted as a pooling of interest, with Bluestone (as defined
herein), the Company has increased its revenues from $141.8 million for the year
ended March 31, 1997 to $570.0 million for the year ended March 31, 1998.
Pre-tax income from continuing operations plus interest expense (including
amortization of debt issuance costs), depreciation and amortization, and
excluding non-recurring expenses and other non-operating income and expenses
("Adjusted EBITDA") has also increased from $1.4 million for the year ended
March 31, 1997 to $24.3 million for the year ended March 31, 1998. On a pro
forma basis, after giving effect to the Pro Forma Operating Statement
Acquisitions (as defined herein), the Company's revenues and Pro Forma Adjusted
EBITDA (as defined herein) for the year ended March 31, 1998 would have been
$1.02 billion and $43.1 million, respectively.
Metal Management is primarily engaged in the collection and processing of
ferrous and non-ferrous metals for resale to metals brokers, steel producers,
and producers and processors of other metals. The Company collects industrial
scrap and obsolete scrap, processes it into reusable forms and supplies the
recycled metals to its customers, including mini-mills, integrated steel mills,
foundries and metals brokers. The Company believes that it provides one of the
most comprehensive offerings of both ferrous and non-ferrous scrap metals in the
industry. The Company's ferrous products primarily include shredded, sheared,
hot briquetted, cold briquetted and bundled scrap and broken furnace iron. The
Company also processes non-ferrous metals, including aluminum, copper, stainless
steel, brass, titanium and high-temperature alloys, using similar techniques and
through application of the Company's proprietary technologies. For the year
ended March 31, 1998, the Company sold approximately 3.1 million tons of ferrous
scrap and approximately 400.2 million pounds of non-ferrous scrap.
According to government sources, the total revenues generated in the metals
recycling industry in 1995 were approximately $19.3 billion. The Company
believes that the metals recycling industry has grown in recent years due in
part to the increased use of ferrous metals by mini-mill steel producers who
utilize electric arc furnace ("EAF") technology. The increase in domestic steel
EAF production from 14.9 million net tons (11.1% of total domestic steel
production) in 1966 to 46.4 million net tons (43.2% of total domestic steel
production) in 1997 has resulted in strong demand for processed ferrous scrap,
the primary raw material used in EAF production. Notwithstanding the recent
adverse market conditions in the steel and metals sector, the Company believes
that increases in EAF production will result in continued strong demand for its
ferrous metals. In addition, the Company believes that long-term demand for
processed non-ferrous scrap will increase due to, among other things, the
industrialization of lesser developed countries and increased utilization of
aluminum and copper in the automotive industry.
The Company believes that there are over 3,000 independent metals recyclers
in North America. Because of the highly fragmented nature of the industry, the
Company believes that no single metals recycler has a significant share of the
national processed scrap market, even though certain recyclers may have a
significant
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<PAGE> 15
share of their local or regional market. The metals recycling industry has
recently begun to experience local market consolidation similar to the
consolidation that has occurred and continues to occur within the municipal
solid waste industry. This consolidation is due in large part to increasing
capital requirements resulting from more stringent environmental and
governmental regulations and the desire by owners of family-operated recyclers
to gain liquidity by selling their closely held businesses to a publicly traded
company.
The Company's objective is to continue to grow through targeted
acquisitions of scrap metals recyclers. The Company plans to continue to follow
its national strategy of regional-based acquisitions by acquiring larger "hub"
companies in major metropolitan or regional markets and complementing such
companies' operations and management with smaller "tuck-in" acquisitions. See
"--Business Strategy--Continue Regional-Based Acquisitions."
COMPANY STRENGTHS
Market Leadership in Major Metropolitan and Regional Markets. In executing
its acquisition strategy, the Company has focused on establishing a significant
presence in major metropolitan or regional markets, where sources of prime
industrial and obsolete scrap (i.e., automobiles and industrial equipment) are
more readily available and from where the Company believes it can better serve
its customers. As a result, the Company has become one of the leading metals
recyclers in the Chicago, Phoenix, Cleveland, Houston, Pittsburgh and Los
Angeles metropolitan markets.
Strong Operational Management. The Company believes that the scrap metals
recycling business is, and will continue to be, locally and regionally based. As
a result, Metal Management has adopted a philosophy of decentralized operational
management, which it believes promotes the continued successful management of
its acquired companies. In considering its core regional acquisitions, the
Company has targeted regional leaders in the scrap metals industry with proven
operational management capabilities. Following these acquisitions, the Company
has generally retained the services of the acquired companies' senior management
teams through the use of multi-year employment agreements and also provided
incentives for such managers to contribute to the growth and profitability of
the Company through the use of stock options and warrants.
Proven Integration Synergies. The Company believes that the operations of
its acquired companies have benefitted, and will continue to benefit, from
joining the Metal Management group of companies. The Company believes that the
metals recycling industry is becoming more capital-intensive and that production
efficiencies are best realized by, among other things, the purchase and
maintenance of sophisticated equipment (such as automobile shredders) and the
sharing of information concerning sources of raw scrap, production technologies
and customer needs. Accordingly, the Company believes that its regional "hub and
spoke" acquisition strategy has benefitted, and will continue to benefit, the
operations of its acquired companies by making available to such companies,
often for the first time, access to greater financial resources, complementary
regional management, purchasing strength in raw scrap and increased distribution
channels. As a further effort to identify synergies, the Company has created the
Office of the President, in which its senior management and regional managers
participate to provide a forum for the sharing of "best practices" and the
exchange of other ideas among the Company's regional operations.
Favorable Distribution Channels. The Company believes that many of its
facilities are situated in locations that afford the Company competitive
advantages in distribution efficiency, both in terms of cost and reliability.
The Company believes that water transportation is the most cost-effective manner
to ship scrap metals over long distances. A significant portion of the Company's
revenues are generated by operations that have direct or convenient access to
water or rail transportation. Such water or rail access significantly expands
the markets for the Company's products, particularly the markets for ferrous
scrap.
Broad Product Offering. The Company has a broad product offering in both
ferrous and non-ferrous metals. The Company's ferrous products include shredded,
sheared and hot briquetted, cold briquetted and bundled scrap and broken furnace
iron. The Company's non-ferrous products include aluminum, copper, stainless
steel and high temperature alloys. The Company believes it currently offers one
of the most comprehensive lines of products available within its markets. By
offering a broad range of products, the Company's customers are able to purchase
all of their scrap metal needs from one supplier, thus reducing the
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<PAGE> 16
administrative and logistical burden associated with supporting multiple
supplier relationships. In addition, the Company's size and processing
capabilities allow it to offer pre-packaged blends of scrap metals that are
immediately available for melting upon delivery to customers, thereby
eliminating the time and space required for customers to purchase and blend
various metals themselves to meet particular chemistry requirements. The Company
also continually seeks to develop and introduce new products. For example, the
Company has invested in sophisticated processing equipment capable of producing
the type of "clean" ferrous scrap that is increasingly demanded by companies
using EAF technology. This "clean" ferrous scrap, which contains fewer
contaminants such as lead, copper and other non-ferrous metals, commands a
premium over the prices charged for other ferrous products. The Company is
currently a significant supplier to companies such as Nucor Corporation, United
States Steel International, Inc., Inland Steel Industries Inc., North Star Steel
Co. and General Motors Corporation. By working with its major customers to
provide a reliable and broad product mix and applying the knowledge gained to
the rest of its business, the Company believes that it can better develop
mutually beneficial partnerships with all of its customers.
BUSINESS STRATEGY
Continue Regional-Based Acquisitions. The Company intends to continue to
grow by implementing its national strategy of completing and integrating
regional acquisitions. The Company's acquisition strategy is to acquire scrap
metals processors in large metropolitan or regional markets that will serve as
platform companies for subsequent "tuck-in" acquisitions of smaller metals
processors. The Company believes that the highly fragmented nature of the scrap
metals recycling industry offers significant opportunities for acquisitions that
meet these criteria and allows for the execution of its acquisition strategy. By
aggressively pursuing this consolidation strategy within the highly fragmented
and growing metals recycling industry, the Company believes that it can enhance
the competitive position and profitability of the operations that it acquires
through improved managerial and financial resources and increased economies of
scale. The Company also believes that the geographic diversity resulting from
the implementation of its acquisition strategy will reduce its vulnerability to
the dynamics of any particular local or regional market. Furthermore, the
Company believes that multi-regional and national steel manufacturers and other
customers for the Company's ferrous and non-ferrous scrap will increasingly
prefer to do business with processed scrap suppliers, such as Metal Management,
that can provide a dependable quantity and quality of processed scrap, as well
as a high degree of service.
Develop and Foster Mutually Beneficial Customer Relationships. The Company
believes that scrap metals recyclers have historically competed primarily on the
basis of price, seeking the highest possible price for processed scrap through
negotiation and attempting to sell more processed scrap when the market prices
for scrap are highest. The Company believes, however, that competing in such a
manner focuses on short-term gain at the expense of long-term profitability. The
Company's strategy, instead, focuses on establishing long-term customer
relationships. The Company believes that it can develop better relationships
with its customers by using its numerous processing facilities to provide them
with a consistent supply of high-quality processed scrap, thereby building
"partnership-type" relationships that the Company believes will be
longer-lasting, more stable and profit enhancing.
Maximize Inventory Turnover. In order to improve the efficiency and
profitability of its processing operations, the Company's business strategy is
to maximize the turnover of its scrap metals inventory, as opposed to collecting
scrap and holding it in speculation of higher unit prices. The Company believes
that this strategy of reducing cycle time serves to reduce exposure to price
fluctuations in the markets for scrap metals. The Company also believes that
this strategy is beneficial to customer relationships, because it allows
customers to depend on a reliable and steady supply of scrap metals that is not
subject to volume limitations during periods of changing prices.
Decentralized Management and Incentives. An important element of the
Company's acquisition strategy is to identify companies with strong, stable and
well-respected management. Metal Management recognizes that business practices
and strategies in the scrap metals industry differ, sometimes significantly,
among metropolitan and regional markets. As a result, the Company manages its
recycling operations on a decentralized basis. To secure the continuity of
strong local management, the Company generally seeks to
3
<PAGE> 17
execute multi-year employment agreements with the senior management of the "hub"
acquisitions for each particular metropolitan or regional market. In addition,
the Company often pays a significant portion of the purchase price for its
acquisitions in restricted Common Stock and also makes use of warrants and
options to acquire Common Stock, resulting in the Company's management having
significant incentive to maximize the operating performance of the Company's
subsidiaries.
ACQUISITION STRATEGY
Since entering the scrap metals recycling business in April 1996, the
Company has consummated 24 acquisitions (hereinafter, the "Completed
Acquisitions") and now operates recycling facilities at 59 locations in 14
states. In pursuing its acquisition strategy, the Company seeks to identify
companies that meet certain acquisition criteria which the Company believes
suggest a strong potential for future growth.
The Company seeks to identify companies that (i) have a successful
operating history; (ii) are located in major metropolitan or regional markets
(population of 1,000,000 or more) and present synergies with existing or planned
acquisition candidates in a particular region; (iii) offer strong management
which can be retained following an acquisition; (iv) complement the Company's
regional and national customer base; (v) have a history of high integrity in
their management and operations; (vi) have convenient access to water or rail
transportation facilities; (vii) do not present serious environmental or
regulatory issues; and (viii) either have existing shredder operations or the
ability to support the installation of such equipment. While a target company
does not have to meet all of the acquisition criteria, it is important that a
metropolitan or regional "hub" company meet most of the criteria and that other
acquisition candidates that can complement the operations of the "hub" company
are identified within a region.
Once an acquisition candidate has been identified, the Company conducts
financial, legal and operational due diligence investigations of the target
company. This due diligence investigation will generally include an
environmental site assessment and a review of the target company's environmental
compliance procedures and practices, a review of the legal and regulatory
affairs of the target and a review of the target company's financial books and
records, including an independent audit of its financial statements, in certain
cases.
4
<PAGE> 18
Set forth below is a table identifying the recycling operations acquired by
the Company since April 1996:
<TABLE>
<CAPTION>
LOCATION OF
PRINCIPAL PROCESSING DATE OF
NAME FACILITIES ACQUISITION
---- ------------------------------ -------------
<S> <C> <C>
EMCO Recycling Corp. ("EMCO Recycling")(1) Phoenix, Arizona April 1996
California Metals Recycling, Inc., Firma, Inc., Firma Los Angeles County, California January 1997
Plastic Co., Inc., MacLeod Metals Co. and Trojan
Trading Co. (collectively, the "MacLeod Companies")
HouTex Metals Company, Inc. ("HouTex") Houston, Texas January 1997
Reserve Iron & Metal Limited Partnership ("Reserve Iron Cleveland, Ohio May 1997
& Metal")(2) Chicago, Illinois
Attalla, Alabama
Briquetting Corporation of America, Ferrex Trading Bryan, Ohio June 1997
Corporation, The Isaac Corporation and Paulding Cleveland, Ohio
Recycling, Inc. (collectively, the "Isaac Group") Dayton, Ohio
Defiance, Ohio
Proler Southwest Inc. and Proler Steelworks L.L.C. Houston, Texas August 1997
(collectively, "Proler Southwest") Jackson, Mississippi
Cozzi Iron & Metal, Inc. ("Cozzi Iron & Metal")(3) Chicago, Illinois December 1997
East Chicago, Indiana
Pittsburgh, Pennsylvania
Memphis, Tennessee
Kankakee Scrap Corporation ("Kankakee Scrap") Kankakee, Illinois December 1997
Houston Compressed Steel Corp. ("Houston Compressed") Houston, Texas January 1998
Aerospace Metals, Inc. ("Aerospace") Hartford, Connecticut January 1998
Salt River Recycling, L.L.C. ("Salt River")(4) Phoenix, Arizona January 1998
Accurate Iron & Metal Co. ("Accurate Iron & Metal")(5) Franklin Park, Illinois February 1998
Superior Forge, Inc. ("Superior Forge") Huntington Beach, California March 1998
Ellis Metals, Inc. ("Ellis Metals") Tucson, Arizona March 1998
Midwest Industrial Metals Corp. ("Midwest Chicago, Illinois April 1998
Industrial")(5)
138 Scrap, Inc. and Katrick, Inc. ("138 Scrap") Riverdale, Illinois May 1998
R&P Holdings, Inc., Charles Bluestone Company and R&P Elizabeth, Pennsylvania May 1998
Real Estate, Inc. (collectively, "Bluestone")(6) Sharon, Pennsylvania
Goldin Industries, Inc., Goldin Industries Louisiana, Gulfport, Mississippi June 1998
Inc. and Goldin of Alabama, Inc. (collectively, the Mobile, Alabama
"Goldin Companies")(7) Harvey, Louisiana
Newell Recycling of Denver, Inc. and Newell Recycling of Denver, Colorado June 1998
Utah, L.L.C. (collectively, "Newell Recycling")(8) Colorado Springs, Colorado
Naporano Iron & Metal, Co. and Nimco Shredding Co. Newark, New Jersey July 1998
(collectively, "Naporano")
Michael Schiavone & Sons, Inc. and related entities North Haven, Connecticut July 1998
(collectively, "Schiavone") Torrington, Connecticut
M. Kimerling & Sons, Inc. ("Kimerling") Birmingham, Alabama July 1988
Nicroloy Company ("Nicroloy") Heidelberg, Pennsylvania July 1998
Midwest Metallics L.P.(5) Chicago, Illinois July 1998
</TABLE>
- ---------------
(1) On March 12, 1998, EMCO Recycling changed its legal name to Metal Management
Arizona, Inc. ("Metal Management Arizona").
(2) The Attalla, Alabama recycling facility is operated through a joint venture
in which the Company's subsidiary, Reserve Iron & Metal, holds a 50%
interest.
(3) The Memphis, Tennessee recycling facility is operated through a joint
venture in which the Company's subsidiary, Cozzi Iron & Metal, holds a 50%
interest.
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<PAGE> 19
(4) At the time it was acquired by the Company, Cozzi Iron & Metal held a 50%
joint venture interest in Salt River.
(5) The Company purchased substantially all of the assets of Accurate Iron &
Metal and certain of the assets of Midwest Industrial and Midwest Metallics
L.P., all of which have been integrated into the Company's Cozzi Iron &
Metal operations.
(6) The Sharon, Pennsylvania recycling facility is operated through a joint
venture in which the Company's subsidiary, Bluestone, holds a 50% interest.
(7) A new subsidiary, Metal Management Gulf Coast, Inc. ("Metal Management Gulf
Coast"), was formed with which the Company purchased substantially all of
the scrap metal assets of the Goldin Companies.
(8) A new subsidiary, Newell Recycling West, Inc. ("Newell Recycling West"), was
formed and merged with Newell Recycling of Denver, Inc. (with Newell
Recycling West surviving the merger). Concurrently therewith, Newell
Recycling West purchased substantially all of the scrap metal assets of
Newell Recycling of Utah, L.L.C.
6
<PAGE> 20
THE EXCHANGE OFFER
Securities Offered......... Up to $180,000,000 principal amount of 10% Senior
Subordinated Notes due 2008, which have been
registered under the Securities Act. The terms of
the New Notes and the Old Notes are identical in
all material respects, except for certain transfer
restrictions, additional interest provisions and
certain other registration rights relating to the
Old Notes described below under "Description of the
New Notes."
The Exchange Offer......... The Company is offering, upon the terms and subject
to the conditions set forth herein and in the
accompanying Letter of Transmittal, to exchange
$1,000 in principal amount of the New Notes for
each $1,000 in principal amount of the outstanding
Old Notes. The issuance of the New Notes is
intended to satisfy obligations of the Company
contained in the Registration Rights Agreement. As
of the date of this Prospectus, $180 million in
aggregate principal amount of the Old Notes is
outstanding. The Company will issue the New Notes
to holders that validly tender Old Notes on or
promptly after the Expiration Date. See "The
Exchange Offer--Terms of the Exchange Offer."
Expiration Date............ 5:00 p.m., New York City time, on November 5, 1998,
as the same may be extended. See "The Exchange
Offer--Expiration Date; Extensions; Amendments."
Conditions of the Exchange
Offer; Extensions;
Amendments................. The Exchange Offer is not conditioned upon any
minimum principal amount of Old Notes being
tendered for exchange. However, the Exchange Offer
is subject to certain customary conditions and to
the terms and provisions of the Registration Rights
Agreement. The Company expressly reserves the
right, in its sole and absolute discretion, (i) to
delay accepting any Old Notes, (ii) to extend the
Exchange Offer, (iii) if any of the conditions set
forth under "The Exchange Offer --Conditions of the
Exchange Offer" shall not have been satisfied, to
terminate the Exchange Offer, by giving oral or
written notice of such delay, extension, or
termination to the Exchange Agent and (iv) to waive
any condition or otherwise amend the terms of the
Exchange Offer in any manner. If the Exchange Offer
is amended in a manner determined by the Company to
constitute a material change, the Company will
promptly disclose such amendments by means of a
prospectus supplement that will be distributed to
the registered holders of the Old Notes. See "The
Exchange Offer--Expiration Date; Extensions;
Amendments" and "The Exchange Offer--Conditions of
the Exchange Offer."
Accrued Interest on the Old
Notes...................... Holders whose Old Notes are accepted for exchange
will have the right to receive interest accrued
thereon from the date of their original issuance or
the last interest payment date, as applicable, to,
but not including, the date of issuance of the New
Notes, such interest to be payable with the first
interest payment on the New Notes. Interest on the
Old Notes accepted for exchange will cease to
accrue on the day prior to the issuance of the New
Notes.
7
<PAGE> 21
Procedures for Tendering
Old Notes; Special
Procedures for Beneficial
Owners..................... Except as otherwise provided below, each holder
desiring to accept the Exchange Offer must transmit
a properly completed and duly executed Letter of
Transmittal, including all other documents required
by the Letter of Transmittal, to the Exchange Agent
(as defined herein) at the address set forth in
"The Exchange Offer--The Exchange Agent;
Assistance" prior to 5:00 p.m., New York City time,
on the Expiration Date. In addition, either (i)
certificates of such Old Notes must be received by
the Exchange Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of
book-entry transfer of such Old Notes, if such
procedure is available, into the Exchange Agent's
account at DTC pursuant to the procedure for
book-entry transfer described below, must be
received by the Exchange Agent prior to the
Expiration Date, or (iii) the holder must comply
with the guaranteed delivery procedures described
below. Any beneficial owner of the Old Notes (a
"Beneficial Owner") whose Old Notes are registered
in the name of a nominee, such as a broker, dealer,
commercial bank or trust company, and who wishes to
tender Old Notes in the Exchange Offer, should
instruct such entity or person to promptly tender
on such Beneficial Owner's behalf. If such
Beneficial Owner wishes to tender on such
Beneficial Owner's own behalf, such Beneficial
Owner must, prior to completing and executing the
Letter of Transmittal and delivering the Old Notes,
make appropriate arrangement to either register
ownership of the Old Notes in such Beneficial
Owner's name or obtain a properly completed bond
power from the registered holder. By executing the
Letter of Transmittal, each holder will represent
to the Company that, among other things, (i) the
holder is not an "affiliate" of the Company as
defined in Rule 405 of the Securities Act, (ii) the
holder is not a broker-dealer that acquired Old
Notes directly from the Company in order to resell
them pursuant to Rule 144A of the Securities Act or
any other available exemption under the Securities
Act, (iii) the holder will acquire the New Notes in
the ordinary course of business and (iv) the holder
is not participating, and does not intend to
participate, and has no arrangement or
understanding with any person to participate, in
the distribution of the New Notes. Any Old Notes
not accepted for exchange for any reason will be
returned, without expense to the tendering holder
thereof, as promptly as practicable after the
Expiration Date. See "The Exchange
Offer --Procedures for Tendering Old Notes."
Guaranteed Delivery
Procedures................. Holders of Old Notes who wish to tender their Old
Notes and (i) whose Old Notes are not immediately
available or (ii) who cannot deliver their Old
Notes, the Letter of Transmittal or any other
documents required by the Letter of Transmittal to
the Exchange Agent on or prior to the Expiration
Date or (iii) who cannot complete the procedures
for delivery by book-entry transfer on a timely
basis, may tender their Old Notes according to the
guaranteed delivery procedures set forth in the
Letter of Transmittal. See "The Exchange
Offer--Guaranteed Delivery Procedures."
Acceptance of Old Notes and
Delivery of New Notes...... Upon satisfaction or waiver of all conditions of
the Exchange Offer, the Company will accept any and
all Old Notes that are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the
8
<PAGE> 22
Expiration Date. The New Notes issued pursuant to
the Exchange Offer will be delivered promptly after
acceptance of the Old Notes. See "The Exchange
Offer--Acceptance of Old Notes for Exchange;
Delivery of New Notes."
Withdrawal Rights.......... Tenders of Old Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the
Expiration Date. See "The Exchange
Offer--Withdrawal Rights."
The Exchange Agent......... LaSalle National Bank is the exchange agent (in
such capacity, the "Exchange Agent"). The address
and telephone number of the Exchange Agent are set
forth in "The Exchange Offer--The Exchange Agent;
Assistance."
Fees and Expenses.......... All expenses incident to the Company's consummation
of the Exchange Offer and compliance with the
Registration Rights Agreement will be borne by the
Company. The Company will also pay certain transfer
taxes, if applicable, related to the Exchange
Offer. See "The Exchange Offer--Fees and Expenses."
Resales of New Notes....... The Company is making the Exchange Offer in
reliance on the position of the staff of the
Commission as set forth in certain interpretive
letters addressed to third parties in other
transactions. However, the Company has not sought
its own interpretive letter and there can be no
assurance that the staff of the Commission would
make a similar determination with respect to the
Exchange Offer as it has in such interpretive
letters to third parties. Based on these
interpretations by the staff of the Commission, the
Company believes that New Notes issued pursuant to
the Exchange Offer to a holder in exchange for Old
Notes may be offered for resale, resold and
otherwise transferred by a holder (other than (i) a
broker-dealer who purchased Old Notes directly from
the Company for resale pursuant to Rule 144A or any
other available exemption under the Securities Act,
(ii) an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act, or
(iii) a broker-dealer who acquired the Old Notes as
a result of market-making or other trading
activities) without further compliance with the
registration and prospectus delivery provisions of
the Securities Act; provided, that such holder is
acquiring the New Notes in the ordinary course of
business and is not participating, and has no
arrangement or understanding with any person to
participate, in a distribution (within the meaning
of the Securities Act) of the New Notes. Holders
wishing to accept the Exchange Offer must represent
to the Company, as required by the Registration
Rights Agreement, that such conditions have been
met. Any holder of Old Notes who is not able to
rely on the interpretations of the staff of the
Commission set forth in the above-mentioned
interpretive letters must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with any sale
or other transfer of such Old Notes unless such
sale is made pursuant to an exemption from such
requirements. See "The Exchange Offer--Resales of
New Notes."
Federal Income Tax
Consequences............... The issuance of the New Notes to holders pursuant
to the terms set forth in this Prospectus will not
constitute an exchange for federal income tax
purposes. Consequently, no gain or loss would be
recognized by holders
9
<PAGE> 23
upon receipt of the New Notes. See "Certain United
States Federal Tax Consequences."
Use of Proceeds............ There will be no proceeds to the Company from the
Exchange Offer. See "Use of Proceeds."
CONSEQUENCES OF NOT EXCHANGING OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes described in the legend thereon. In general, the
Old Notes may not be offered or sold unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Company does not
currently anticipate that it will register the Old Notes under the Securities
Act. See "Risk Factors--Restrictions on Resale" and "The Exchange
Offer--Consequences of Failure to Exchange."
10
<PAGE> 24
DESCRIPTION OF THE NEW NOTES
The form and terms of the New Notes will be identical in all material
respects to the form and terms of the Old Notes, except that (i) the New Notes
have been registered under the Securities Act and, therefore, will not bear
legends restricting the transfer thereof, (ii) holders of New Notes will not be
entitled to any Liquidated Damages pursuant to certain circumstances under the
terms of the Registration Rights Agreement and (iii) holders of New Notes will
not be entitled to certain other rights under the Registration Rights Agreement.
The New Notes will evidence the same debt as the Old Notes and will be entitled
to the benefits of the Indenture. See "The Exchange Offer--Termination of
Certain Rights," "The Exchange Offer --Procedures for Tendering Old Notes" and
"Description of the New Notes."
Securities Offered......... Up to $180,000,000 principal amount of the
Company's 10% Senior Subordinated Notes due 2008,
which have been registered under the Securities
Act.
Maturity Date.............. May 15, 2008.
Interest................... 10% calculated on the basis of a 360-day year
consisting of twelve 30-day months.
Interest Payment Dates..... Interest on the New Notes will be payable
semi-annually in arrears on May 15 and November 15
of each year, commencing November 15, 1998.
Ranking.................... The New Notes will be general, unsecured
obligations of the Company, will be subordinated in
right of payment to all Senior Debt of the Company,
will rank pari passu with all senior subordinated
debt of the Company, and will be senior in right of
payment to all existing and future Subordinated
Indebtedness of the Company, if any. As of
September 30, 1998, the Company had approximately
$165.0 million of Senior Debt outstanding. The
Company has the ability to incur up to $250 million
of Senior Debt under the Senior Credit Facility,
subject to certain borrowing base limitations, with
capacity under the Indenture being subject to
increase to up to $300 million as the Company's
borrowing base expands. See "Description of the
Senior Credit Facility," "Description of the New
Notes--Subordination" and "--Certain
Covenants--Incurrence of Indebtedness and Issuance
of Disqualified Stock."
Optional Redemption........ Except as described below, the Notes are not
redeemable at the Company's option prior to May 15,
2003. From and after May 15, 2003, the Notes will
be subject to redemption at the option of the
Company, in whole or in part, at the redemption
prices set forth herein, plus accrued and unpaid
interest and Liquidated Damages, if any, to the
date of redemption.
In addition, prior to May 15, 2001, up to 35% of
the aggregate principal amount of Notes will be
redeemable at the option of the Company from any
net proceeds of one or more sales of Common Stock,
at a price of 110% of the principal amount of the
Notes, plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of
redemption; provided that at least 65% of the
original aggregate principal amount of Notes
remains outstanding immediately after each such
redemption; and provided, further, that any such
redemption shall occur within 60 days of the date
of the closing of the corresponding sale of Common
Stock. See "Description of the New Notes--Optional
Redemption".
11
<PAGE> 25
Change of Control.......... In the event of a Change of Control, Holders (as
defined herein) of the New Notes will have the
right to require the Company to repurchase their
New Notes, in whole or in part, at a price equal to
101% of the aggregate principal amount thereof,
plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of repurchase.
New Note Guarantees........ The Company's payment obligations under the New
Notes will be jointly and severally guaranteed on
an unsecured, senior subordinated basis (the
"Guarantees") by each of the Company's current and
certain future Restricted Subsidiaries. The
Guarantees will be subordinated to the obligations
of the Guarantors under the Senior Credit Facility
(as defined herein). See "Description of the New
Notes--Subsidiary Guarantees".
Certain Covenants.......... The Indenture governing the Notes (the "Indenture")
contains certain covenants that will, among other
things, limit the ability of the Company and its
Restricted Subsidiaries to incur additional
Indebtedness (as defined herein) and issue
Disqualified Stock (as defined herein), pay
dividends or distributions or make investments or
make certain other Restricted Payments (as defined
herein), enter into certain transactions with
affiliates, dispose of certain assets, incur liens
securing pari passu and Subordinated Indebtedness
of the Company, and engage in mergers and
consolidations. See "Description of the New Notes."
Registration Rights........ In the event that applicable law or Commission
policy does not permit the Company to effect the
Exchange Offer, or if certain holders of the Old
Notes are not permitted to participate in, or do
not receive the benefit of the Exchange Offer, the
Registration Rights Agreement provides that the
Company will use its best efforts to cause to
become effective a shelf registration statement
(the "Shelf Registration Statement") with respect
to the resale of the Old Notes and to keep such
Shelf Registration Statement effective until two
years after the Closing Date or such shorter period
ending when all the Old Notes have been sold
thereunder or cease to be outstanding. Liquidated
Damages with respect to the Old Notes are payable
under certain circumstances if the Company is not
in compliance with its obligations under the
Registration Rights Agreement. See "Description of
the New Notes--Registration Rights; Liquidated
Damages."
Absence of a Public
Market for the Notes....... The New Notes are new securities for which there is
currently no established trading market. Although
the Initial Purchasers have informed the Company
that they currently intend to make a market in the
New Notes, they are not obligated to do so and any
such market making may be discontinued at any time
without notice. Accordingly, there can be no
assurance as to the development or liquidity of any
market for the New Notes. The New Notes are
expected to be designated for trading in the PORTAL
market. The Company does not intend to apply for
listing of the New Notes on any securities exchange
or for quotation through the National Association
of Securities Dealers Automated Quotation System.
For more detailed information regarding the terms of the New Notes and for
definitions of capitalized terms not otherwise defined, see "Description of the
New Notes."
12
<PAGE> 26
RISK FACTORS
Holders of Old Notes should carefully consider all of the information set
forth in this Prospectus and, in particular, should evaluate the specific
factors set forth under "Risk Factors" for a discussion of certain risks
involved with an investment in the New Notes.
13
<PAGE> 27
RISK FACTORS
Holders of Old Notes should carefully consider, among other matters, the
following in connection with a decision to tender their Old Notes in the
Exchange Offer. The risk factors set forth below are generally applicable to the
Old Notes as well as the New Notes.
LEVERAGE; ABILITY TO SERVICE INDEBTEDNESS
The Company is highly leveraged. As of September 30, 1998, the Company had
approximately $165.0 million of Senior Debt outstanding. Subject to certain
restrictions, exceptions and financial tests set forth in the Indenture and the
Senior Credit Facility, however, the Company may incur additional indebtedness
in the future, including up to $250 million of Senior Debt under the Senior
Credit Facility, subject to certain borrowing base limitations pursuant to which
the Company's borrowing base as of September 30, 1998 permitted aggregate
borrowings under the Senior Credit Facility of approximately $190.5 million. The
degree to which the Company is leveraged could have important consequences to
the holders of the Notes, including, but not limited to, the following: (i) a
substantial portion of the Company's cash flow from operations will be required
to be dedicated to debt service and will not be available to the Company for its
operations; (ii) the Company's ability to obtain additional financing in the
future for acquisitions, capital expenditures, working capital or general
corporate purposes could be limited; (iii) the Company will have increased
vulnerability to adverse general economic and scrap metals industry conditions;
and (iv) the Company may be vulnerable to higher interest rates because
borrowings under certain of its credit arrangements are at variable rates of
interest. The Company's ability to make scheduled payments of principal, to pay
interest on or to refinance its indebtedness (including the Notes) depends on
its future performance and financial results, which, to a certain extent, are
subject to general economic, financial, competitive, legislative, regulatory and
other factors beyond the Company's control. There can be no assurance that the
Company's business will generate sufficient cash flow from operations or that
future working capital borrowings will be available in an amount sufficient to
enable the Company to service its indebtedness, including the Notes, or make
necessary capital expenditures. See "Description of the Senior Credit Facility"
and "Description of the New Notes".
SUBORDINATION
The payment of principal, premium, if any, and interest on the Notes will
be subordinated in right of payment to the prior payment in full of all existing
and future Senior Debt of the Company, including indebtedness incurred under the
Senior Credit Facility. As of September 30, 1998, the Company had approximately
$165.0 million of Senior Debt outstanding. The Company has the ability to incur
up to $250 million of Senior Debt under the Senior Credit Facility, subject to
certain borrowing base limitations pursuant to which the Company's borrowing
base as of September 30, 1998 permitted aggregate borrowings under the Senior
Credit Facility of approximately $190.5 million. Subject to certain
restrictions, exceptions and financial tests set forth in the Indenture and the
Senior Credit Facility, the Company also may incur additional indebtedness in
the future that ranks prior to claims of holders of the Notes. See "Description
of the Senior Credit Facility" and "Description of the New Notes--Certain
Covenants--Incurrence of Indebtedness and Issuance of Disqualified Stock".
The subordination provisions of the Indenture provide that, upon any
payment or distribution of the Company's assets to creditors upon any
dissolution, winding-up, insolvency, bankruptcy, receivership, liquidation,
reorganization or other proceedings relating to the Company, whether voluntary
or involuntary, holders of the Senior Debt are entitled to receive payment in
full of all amounts due thereon before the holders of Notes are entitled to
receive any payment with respect to the Notes. In the event of any default in
the payment of certain Senior Debt, no payment with respect to the Notes may be
made by the Company unless and until such default has been cured or waived. See
"Description of the New Notes--Subordination".
14
<PAGE> 28
RESTRICTIONS IMPOSED BY INDEBTEDNESS
The Senior Credit Facility and the Indenture contain covenants that, among
other things and subject to certain exceptions, restrict the ability of the
Company to incur additional indebtedness, pay dividends, prepay subordinated
indebtedness, dispose of certain assets, create liens and make certain
investments or acquisitions, and otherwise restrict corporate activities. In
addition, under the Senior Credit Facility, the Company is required to satisfy
specified financial covenants, including an interest coverage ratio and ratio of
capital expenditures to consolidated revenues. The ability of the Company to
comply with such provisions may be affected by general economic conditions and
other events beyond the Company's control. The breach of any of these covenants
could result in a default under the Senior Credit Facility. In the event of any
such default, depending on the actions taken by the lenders under the Senior
Credit Facility, such lenders could elect to declare all amounts borrowed under
the Senior Credit Facility, together with accrued interest, to be due and
payable. A default under the Senior Credit Facility or the instruments governing
the Company's other indebtedness could constitute a cross-default under the
Indenture and any instruments governing the Company's other indebtedness, and a
default under the Indenture could constitute a cross-default under the Senior
Credit Facility and any instruments governing the Company's other indebtedness.
See "Description of the Senior Credit Facility" and "Description of the New
Notes".
POTENTIAL INABILITY TO CONTROL OR MANAGE GROWTH OR TO SUCCESSFULLY INTEGRATE
ACQUIRED BUSINESSES
The Company intends to continue to actively pursue mergers and acquisitions
in the scrap metals recycling industry. There can be no assurance that the
Company will be successful in acquiring other entities or that it will be able
to effectively manage these acquired entities. The Company's ability to achieve
its expansion objectives and to manage its growth effectively depends on a
variety of factors, including the ability to identify appropriate acquisition
targets and to negotiate acceptable terms for their acquisition, the integration
of new businesses into the Company's operations, the achievement of cost savings
and the availability of capital. The inability to control or manage growth
effectively or to successfully integrate new businesses into the Company's
operations would have a material adverse effect on the Company's results of
operations and financial condition. Depending on the nature and size of these
transactions, if any, the Company may experience working capital and liquidity
shortages. There can be no assurance that additional financing will be available
on terms and conditions acceptable to the Company, if at all.
LIMITED OPERATING HISTORY; HISTORY OF OPERATING LOSSES
The Company has only recently entered the scrap metals recycling industry.
Accordingly, past financial performance should not be considered as a reliable
indicator of future performance, and historical trends should not be used to
anticipate results or trends in future periods. Due to the limited experience of
management in effecting a consolidation strategy on the scale being pursued by
the Company, there can be no assurance that the Company will be able to
successfully effect its consolidation strategy, even if the Company is able to
acquire other entities on acceptable terms and conditions. In addition, none of
the Company's existing subsidiaries has experience operating as a subsidiary of
a public holding company subject to formal accounting and reporting
requirements. The Company will be required to continue to devote significant
management time and capital to enhance information systems and to improve and
monitor internal controls, as well as to recruit managers with appropriate
skills to insure the timeliness and accuracy of financial reports. The success
of the consolidation strategy depends in part on the ability of the Company's
management to oversee diverse operations and to successfully integrate
processing, marketing and other resources.
In addition, the Company's EMCO Recycling (now Metal Management Arizona)
subsidiary has incurred operating losses and required capital infusions since
its acquisition in April 1996. There can be no assurance that the Company will
not be required to provide additional funding to Metal Management Arizona.
Further, there can be no assurance that existing or future subsidiaries will not
require similar infusions or that the Company will be able to provide such
fundings if needed. The need to provide this funding or its inability to do so
could have a material adverse effect on the Company's results of operations or
financial condition.
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CYCLICALITY OF THE METALS RECYCLING INDUSTRY
The operating results of the scrap metals recycling industry in general,
and the Company's operations specifically, are highly cyclical in nature as they
tend to reflect and be amplified by general economic conditions. Historically,
in periods of national recession or periods of minimal economic growth, the
operations of scrap metals recycling companies have been materially and
adversely affected. For example, during recessions or periods of minimal
economic growth, the automobile and the construction industries typically
experience major cutbacks in production, resulting in decreased demand for
steel, copper and aluminum and significant fluctuations in demand and pricing
for the Company's products. Future economic downturns in the national economy
would likely materially and adversely affect the Company's results of operations
and financial condition. The ability of the Company to withstand significant
economic downturns in the future will depend in part on the level of the
Company's capital and liquidity.
POTENTIAL INABILITY TO COMPLETE ACQUISITIONS
The Company engages in discussions with third parties regarding potential
acquisitions of companies or businesses in the metals recycling industry. If the
parties are able to agree generally on the nature, terms and conditions of a
transaction, a letter of intent is typically prepared to reflect this
understanding. In many cases, these letters of intent are structured as "binding
letters of intent" to purchase the business, although each such letter of intent
is still generally subject to a number of terms and conditions, including but
not limited to negotiation and execution of definitive purchase agreements. In
addition, each potential acquisition may be subject to additional contingencies
specific to that acquisition. There can be no assurance that any such potential
acquisition will result in the execution of a definitive agreement or that such
acquisition will be completed on terms and conditions acceptable to the Company.
COMMODITY PRICE RISK
Although the Company has a policy of turning over its inventory of raw or
processed scrap metals as rapidly as possible, the Company is exposed to
commodity price risk during the period that it has title to products that are
held in inventory for processing and/or resale. Prices of commodities can be
volatile due to numerous factors beyond the Company's control, including general
economic conditions, labor costs, competition, availability of scrap metal
substitutes, import duties, tariffs and currency exchange rates. In an
increasing price environment, competitive conditions may limit the Company's
ability to pass on price increases to its customers. In a decreasing price
environment, the Company may not have the ability to fully recoup the cost of
raw scrap it processes and sells to its customers. The lack of long-term
purchase agreements with the Company's significant customers also may exacerbate
this risk.
COMPREHENSIVE REGULATORY REQUIREMENTS
The Company is subject to significant government regulation, including
stringent environmental laws and regulations. Among other things, these laws and
regulations impose comprehensive local, state, federal, foreign and
supranational statutory and regulatory requirements concerning, among other
matters, the treatment, acceptance, identification, storage, handling,
transportation and disposal of industrial by-products, hazardous and solid waste
materials, waste water, stormwater effluent, air emissions, soil contamination,
surface and groundwater pollution, employee health and safety, operating permit
standards, monitoring and spill containment requirements, zoning, and land use,
among others. Various laws and regulations set prohibitions or limits on the
release of contaminants into the environment. Such laws and regulations also
require permits to be obtained and manifests to be completed and delivered in
connection with any shipment of prescribed materials so that the movement and
disposal of such material can be traced and the persons responsible for any
mishandling of such material can be identified. This regulatory framework
imposes significant compliance burdens, costs and risks on the Company.
Violation of such laws and regulations may give rise to significant liability to
the Company, including fines, damages, fees and expenses.
Releases of certain industrial by-products and waste materials are subject
to particular laws and regulations. Although the specific provisions of laws and
regulations related to such releases vary among
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jurisdictions, such laws and regulations typically require that the relevant
authorities be notified promptly, that the release be cleaned up promptly, and
that remedial action be taken by the responsible party and/or owner of the site
to restore the environment to levels protective of human health and the
environment. Generally, the governmental authorities are empowered to act to
clean up and remediate releases and environmental damage and to charge the costs
of such cleanup to one or more of the owners of the property, the person
responsible for the spill, the generator of the contaminant and certain other
parties or to direct the responsible party to take such action. These
authorities may also impose a tax or other liens to secure such parties'
reimbursement obligations. Environmental laws and regulations impose strict
operational requirements on the performance of certain aspects of hazardous or
toxic substance remediation. These requirements specify complex methods for
identification, monitoring, storage, treatment and disposal of waste materials
managed during a project. Failure to meet these requirements could result in
substantial fines and other penalties.
Environmental legislation and regulations have changed rapidly in recent
years, and it is likely that the Company will be subject to even more stringent
environmental standards in the future. For example, the ultimate effect of the
regulations to be implemented under the Clean Air Act Amendments of 1990 (the
"Clean Air Act"), and the actual amount of any capital expenditures required
thereby, will depend on how the Clean Air Act is interpreted and implemented
pursuant to regulations that are currently being developed and on additional
factors such as the evolution of environmental control technologies and the
economic viability of these technologies. For these reasons, future capital
expenditures for environmental control facilities cannot be predicted with
accuracy; however, one may expect that environmental control standards will
become increasingly stringent and that the expenditures necessary to comply with
them could increase substantially.
Local, state, federal, foreign and supranational governments and agencies
have also from time to time proposed or adopted other types of laws, regulations
or initiatives with respect to the scrap metals recycling industry, including
laws, regulations and initiatives intended to ban or restrict the intrastate,
interstate or international shipment of wastes, to impose higher taxes or fees
on certain shipments of waste, or to classify or reclassify certain categories
of non-hazardous wastes as hazardous. Certain local, state, federal, foreign and
international governments and agencies have promulgated "flow control" or other
regulations, which attempt to require that all waste (or certain types of waste)
generated within the jurisdiction in question must go to certain disposal sites.
Due to the complexity of regulation of the industry and to public and political
pressure, implementation of existing or future laws, regulations or initiatives
by different levels of governments may be inconsistent and difficult to foresee.
The Company requires, and must comply with, various permits and licenses to
conduct its operations. Government agencies continually monitor compliance with
permits and licenses and the Company's facilities are subject to periodic
unannounced inspection by local, state and federal authorities. Violations of
any permit or license, if not remedied, could result in the Company incurring
substantial fines, suspension of operations or closure of a site.
Governmental authorities have a wide variety of powerful administrative
enforcement actions and remedial orders available to them to cause compliance
with environmental laws or to remedy or punish violations of such laws. Such
orders may be directed to various parties, including present or former owners or
operators of the concerned sites, or parties that have or had control over the
sites. In certain instances, fines and treble damages may be imposed. In the
event that administrative actions fail to cure a perceived problem or where the
relevant regulatory agency so desires, an injunction or temporary restraining
order or damages may be sought in a court proceeding.
Some laws also give private parties the right, in addition to existing
common laws claims, to file claims for injunctive relief or damages against the
owners or operators of the site. Public interest groups, local citizens, local
municipalities and other persons or organizations may have a right to seek
judicial relief for purported violations of law or releases of pollutants into
the environment. In some jurisdictions, recourse to the courts by individuals
under common law principles such as trespass or nuisance have been or may be
enhanced by legislation providing members of the public with statutory rights of
action to protect the environment. In such cases, even if a scrap metals
recycling facility is operated in full compliance with applicable laws and
regulations, local citizens and other persons and organizations may seek
compensation for damages allegedly
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caused by the operation of the facility. In some cases, the operation of scrap
metals recycling facilities is subjected to heightened public scrutiny because
of residential or other non-industrial property uses that have developed around
such facilities. So-called "Not In My Backyard" ("NIMBY") grass roots community
opposition to such facilities can materially interfere with such facilities'
on-going operations and growth.
The Company believes that, with heightened legal, political and citizen
awareness and concerns, all companies in the scrap metals recycling industry may
be faced, in the normal course of operating their businesses, with fines and
penalties and the need to expend substantial funds for capital projects,
remedial work and operating activities, such as environmental contamination
monitoring, soil removal, groundwater treatment, creation of engineered
barriers, establishing institutional controls and related activities. Regulatory
or technological developments relating to the environment may require companies
engaged in the scrap metals recycling industry to modify, supplement or replace
equipment and facilities at costs which may be substantial. Because the scrap
metals recycling industry has the potential for discharge of materials into the
environment, a material portion of the capital expenditures by the Company is
expected to relate, directly or indirectly, to such equipment and facilities.
Moreover, it is possible that future developments, such as increasingly strict
requirements of environmental laws and regulations, and enforcement policies
will require even more significant capital investments in this regard.
POTENTIAL ENVIRONMENTAL LIABILITY
General. The Company is subject to potential liability and may also be
required from time to time to clean up or take certain remedial action with
regard to sites currently or formerly used in connection with its operations.
Furthermore, the Company may be required to pay for all or a portion of the
costs to clean up or remediate sites the Company never owned or on which it
never operated if it is found to have arranged for transportation, treatment or
disposal of pollutants or hazardous or toxic substances on or to such sites. The
Company also is subject to potential liability for environmental damage that its
assets or operations may cause nearby landowners, particularly as a result of
any contamination of drinking water sources or soil, including damage resulting
from conditions existing prior to the acquisition of such assets or operations.
Any substantial liability for environmental damage could materially adversely
affect the operating results and financial condition of the Company, and could
materially adversely affect the marketability and price of the Company's stock.
Incompleteness of Site Investigations. As part of its pre-transaction "due
diligence" investigations, the Company typically hires an environmental
consulting firm to conduct transaction screen reviews, or Phase I and/or Phase
II site assessments of the sites owned or leased by particular acquisition or
merger candidates (the "Pre-Transaction Site Assessments"). However, such
Pre-Transaction Site Assessments have not covered (and will not in the future
cover) all of the sites owned or leased by the companies which are acquired by
or merge with the Company. Moreover, such Pre-Transaction Site Assessments which
have occurred have not been designed or expected (and will not in the future be
designed or expected) to disclose all material contamination or liability that
may be present. For example, the Company does not include soil sampling or core
borings as a standard part of the Phase I portion of its Pre-Transaction Site
Assessments, even though such sampling and core borings might increase the
chances of finding contamination on a particular site. Failure to conduct soil
sampling and core borings on a particular site could result in the Company
failing to identify a seriously contaminated site prior to an acquisition or
merger, and could materially adversely affect the Company.
Likelihood of Contamination at Some Sites. Pre-Transaction Site
Assessments of the Company's current sites conducted by independent
environmental consulting firms have revealed that some soil, surface water
and/or groundwater contamination is likely at certain of these sites, and have
recommended that certain additional investigations and remediation be conducted.
Based upon its review of these reports, the Company believes that it is likely
that contamination exists at certain of its sites and that it is likely that
additional investigation, monitoring and remediation will be required at some of
the sites. Also based upon its review of these reports, the Company believes
that such contamination is likely to include, but not be limited to:
polychlorinated biphenyls (PCBs); total petroleum hydrocarbons; volatile organic
compounds (VOCs); antimony; arsenic; cadmium; copper, lead; mercury; silver;
zinc; waste oil; toluene; meta-and para-xylenes;
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baghouse dust; and/or aluminum dross. The ultimate extent of such contamination
cannot be stated with any certainty at this point, and there can be no assurance
that the cost of remediation will be immaterial, and it is not unlikely that the
Company will establish one or more reserves relating to environmental
remediation in the future. The existence of such contamination could result in
federal, state, local or private enforcement or cost recovery actions against
the Company, possibly resulting in disruption of Company operations, the need
for proactive remedial measures, and substantial fines, penalties, damages,
costs and expenses being imposed against the Company.
The Company expects to require future cash outlays as it incurs the actual
costs relating to the remediation of environmental liabilities. The incurrence
of the costs may have a material adverse effect on the Company's results of
operation and financial condition.
In connection with the acquisition of the assets of Aerospace, the Company
has identified certain on-site contamination which will require remediation in
accordance with a remediation plan prepared by an independent engineering firm.
The costs of such remediation will be paid by the seller of the assets of
Aerospace from an escrow fund established for such purpose out of the purchase
consideration paid by the Company for such assets.
Uncertain Costs of Environmental Compliance and Remediation. Many factors
affect the level of expenditures the Company will be required to make in the
future to comply with environmental requirements, including: (i) new local,
state and federal laws and regulations; (ii) the developing nature of
administrative standards promulgated under Superfund and other environmental
laws, and changing interpretations of such laws; (iii) uncertainty regarding
adequate control levels, testing and sampling procedures, new pollution control
technology and cost benefit analyses based on market conditions; (iv) the
incompleteness of information regarding the condition of certain sites; (v) the
lack of standards and information for use in the apportionment of remedial
responsibilities; (vi) the numerous choices and costs associated with diverse
technologies that may be used in remedial actions at such sites; (vii) the
possible ability to recover indemnification or contribution from third parties;
and (viii) the time periods over which eventual remediation may occur.
Therefore, the estimated costs, and the timing of such costs, for future
environmental compliance (capital expenditures or increases in operating costs
or other expenditures) and remediation cannot be accurately predicted and are
necessarily imprecise; however, such costs could be material to future quarterly
or annual results of operations of the Company. In addition, it is not possible
to predict whether or not such costs can be passed on to customers through price
increases.
Lack of Environmental Impairment Insurance. In general, the Company's
subsidiaries do not carry environmental impairment liability insurance. In
general, the Company's subsidiaries operate under general liability insurance
policies, which do not cover environmental damage. If one or more of the
Company's subsidiaries were to incur significant liability for environmental
damage not covered by environmental impairment insurance, or for other claims in
excess of its general liability insurance and umbrella coverage, the Company's
results of operations and financial condition could be materially adversely
affected.
Risks Associated With Certain By-Products. Although the majority of the
Company's metal products are currently exempt from applicable solid waste
regulations, the Company's scrap metals recycling operations produce significant
amounts of by-products. Heightened environmental risk is associated with certain
of these by-products. For example, certain of the Company's subsidiaries operate
shredders for which the primary feed materials are automobile hulks and obsolete
household appliances. Approximately 20% of the weight of an automobile hulk
consists of material ("shredder fluff") which remains after the segregation of
ferrous and saleable non-ferrous metals. Federal environmental regulations
require shredder fluff to pass a toxic leaching test to avoid classification as
a hazardous waste. The Company endeavors to have hazardous contaminants from the
feed material removed prior to shredding and, as a result, the Company believes
the shredder fluff generated is properly not considered a hazardous waste.
Should the laws, regulations or testing methods change with regard to shredder
fluff disposal, the Company may incur additional significant expenditures.
Potential Superfund Liability. (a) The Company's Reserve Iron & Metal,
Cozzi Iron & Metal and Kankakee Scrap subsidiaries have received notices from
the EPA that each such company and numerous other parties are considered PRPs
and may be obligated under Superfund to pay a portion of the cost of
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remedial investigation, feasibility studies and, ultimately, remediation to
correct alleged releases of hazardous substances at the Standard Scrap
Metal/Chicago International Exporting Removal Action Site. Superfund may impose
joint and several liability for the costs of remedial investigations and actions
on the entities that arranged for disposal of certain wastes, the waste
transporters that selected the disposal sites, and the owners and operators of
such sites. Responsible parties (or any one of them) may be required to bear all
of such costs regardless of fault, legality of the original disposal, or
ownership of the disposal site. Based upon their analysis of the situation, the
management of Reserve Iron & Metal, Cozzi Iron & Metal and Kankakee Scrap
currently do not expect their aggregate potential liability to be in excess of
$175,000. There can be no assurance, however, that their aggregate potential
liability may not be greater than $175,000.
(b) Cozzi Iron & Metal has received a notice from the EPA that Cozzi Iron
& Metal is a PRP under Superfund in regard to the site referred to as H&H
Recycling in Gary, Indiana. Cozzi Iron & Metal believes that a settlement may be
reached with respect to the H&H Recycling site which would result in a cost of
approximately $600,000. There can be no assurance that such potential liability
will not be material.
(c) Cozzi Iron & Metal was served in a private cost recovery action
alleging that Cozzi Iron & Metal is a PRP under Superfund in regard to the site
referred to as Gould Battery Site in Pennsylvania. Based upon its analysis of
the situation, including transaction documentation and indemnifications, Cozzi
Iron & Metal currently expects that its ultimate liability in regard to this
matter will be de minimus, but there can be no assurance this will be the case.
(d) Cozzi Iron & Metal has received a notice from the Port Refinery Joint
Defense Group that an entity known as Riverside Trading has been joined as a
defendant in a cost recovery action brought on behalf of the EPA under
Superfund. Cozzi Iron & Metal is the parent of a subsidiary that operates a
facility known as Riverside Iron & Steel. Based upon its analysis of the
situation, including transaction documentation, Cozzi Iron & Metal currently
expects that its ultimate liability in regard to this matter will be de minimus,
but there can be no assurance this will be the case.
(e) Bluestone has received notice from the EPA that it is a PRP under
Superfund in regard to the site referred to as the Metcoa Site in Pulaski,
Pennsylvania. Bluestone has entered into a settlement agreement with the EPA
regarding the cleanup of this site and has paid its initial settlement share
under the settlement agreement. However, the aggregate costs of cleaning up this
site are likely to exceed the original estimate of the aggregate cleanup costs
upon which the initial settlement amount paid by Bluestone was based. Based on
its current analysis of the situation, Bluestone expects that its share of the
additional cleanup costs at this site will not exceed $100,000. Although
Bluestone has reserved funds to address additional cleanup costs and has
obtained an indemnity from the previous owners of the company for costs which
exceed this reserve, there can be no assurance that Bluestone may not be
required to make additional expenditures in connection with this site.
(f) Bluestone has received notice from the EPA that it is a PRP under
Superfund in regard to the site referred to as the Jacks Creek/Sitkin Smelting
Facility Superfund Site in Mifflin County, Pennsylvania. Bluestone joined a PRP
group which has submitted a good faith offer to the EPA to enter into a consent
decree. Based on its analysis of the situation, Bluestone expects that its share
of the cleanup costs at this site will not exceed $250,000. Although Bluestone
has reserved funds to address such cleanup costs and has obtained an indemnity
from the previous owners of the company for costs which exceed this reserve,
there can be no assurance that Bluestone may not be required to make additional
expenditures in connection with this site.
(g) Naporano Iron & Metal Co. has been identified as a PRP in connection
with the Jack's Creek/ Sitkin Smelting site and the Woodward Metals Processing
site. Based on its analysis of the situation, Naporano Iron & Metal Co. does not
expect its aggregate liability with respect to these sites to exceed $185,000.
Naporano Iron & Metal Co. has received an indemnity from the previous owners of
the company for costs related to these sites, and does not expect the matter to
result in material liability; however, there can be no assurance that Naporano
Iron & Metal Co. may not be required to make additional expenditures in
connection with these sites.
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(h) Nimco Shredding Co. received a request for information from the United
States Environmental Protection Agency in connection with the Central Steel Drum
site. Nimco Shredding Co. advised the United States Environmental Protection
Agency that it did not transact any business with Central Steel Drum that could
lead to cleanup liability. Additionally, Nimco Shredding Co. has received an
indemnity from the previous owners of the company for all costs and expenses
related to the Central Steel Drum site. While the Nimco Shredding Co. believes
that the matter will not result in material liability, there can be assurance
that it will not be pursued or required to make expenditures in connection with
the site in the future.
(i) Reserve Iron & Metal has been identified as a PRP under Superfund in
connection with the C&R Battery site. Based on its analysis of the situation,
the management of Reserve Iron & Metal believes that its liability in connection
with this site is de minimus; however, there can be no assurance that this will
be the case.
Underground Storage Tanks. Underground storage tanks ("USTs") exist at
several of the Company's sites. USTs are subject to various federal, state and
local laws on their operation. In the event a release of regulated product has
occurred, the Company may incur significant costs to investigate and remediate
the release.
Recommendations of Environmental Consultants. Environmental consultants to
the Company have recommended that a variety of preventative and/or remedial
actions be undertaken, including: the sampling of soil, surface and groundwater
at its various facilities; the remediation of any existing contamination under
applicable regulations; the development of Spill Prevention Control and
Countermeasure Plans ("SPCC"); the completion of certain actions in regard to
Storm Water Pollution Prevention Plans; the timely completion and/or filing of
certain annual reports and summaries required by governmental agencies; the
completion of Oil Discharge and Response Plans; and the remediation of certain
materials suspected of containing asbestos. If the Company fails to follow these
recommendations for an indefinite period of time, one or more of the sites
might, potentially, be subject to a governmental enforcement action, the
imposition of fines, penalties and damages, and/or require remediation at some
future time at a cost which may have an adverse effect on the Company's results
of operations and financial condition.
Compliance History. The Company has, in the past, been found not to be in
compliance with certain environmental laws and regulations, and has incurred
fines associated with such violations which have not been material in amount and
may in the future incur additional fines associated with such violations. The
Company has also paid a portion of the costs of certain remediation actions at
certain sites. No assurance can be given that material fines, penalties, damages
and expenses resulting from additional compliance issues and liabilities will
not be imposed on the Company in the future.
EMPLOYEE HEALTH AND SAFETY
The Company's operations are subject to regulation by federal, state and
local agencies responsible for employee health and safety, including the
Occupational Safety and Health Administration ("OSHA"). A total of five
accidental deaths of, and two serious accidental injuries to, employees have
occurred at the Company's Cozzi Iron & Metal, HouTex and Reserve Iron & Metal
subsidiaries during the past four years. Cozzi Iron & Metal and Reserve Iron &
Metal have been fined by OSHA in regard to such incidents. HouTex has also been
cited and fined by OSHA for alleged failure to establish energy control
procedures and employee training in regard to mobile shearing equipment. No
assurance can be given that potential liabilities of the Company in regard to
such deaths and injuries, or in regard to any future deaths of or injuries to
the Company's employees, will not be material.
LABOR RELATIONS
Many of the Company's active employees are represented by various labor
unions, including the Teamsters Union, the United Steel Workers Union and the
United Auto Workers. As the Company's (and its subsidiaries') agreements with
these unions expire, there can be no assurance that the Company will be able to
negotiate extensions or replacements thereof on terms favorable to the Company,
or at all, or that the Company will not experience strikes, lockouts or other
labor actions from time to time. There can be no
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assurance that new labor agreements will be reached with the Company's unions as
such labor contracts expire. Any labor action resulting from the foregoing may
have a material adverse effect on the Company or its results of operations.
CONTROL BY PRINCIPAL STOCKHOLDERS; POTENTIAL CONFLICTS OF INTEREST
Pursuant to the stockholder's agreement (the "Stockholders Agreement"),
among Albert A. Cozzi, Frank J. Cozzi and Gregory P. Cozzi (the "Cozzi
Shareholders"), T. Benjamin Jennings and Gerard M. Jacobs (the "MTLM
Shareholders"), Samstock, L.L.C. ("Samstock") and the Company, the Company's
Board of Directors is comprised of five directors nominated by the Cozzi
Shareholders, five directors nominated by the MTLM Shareholders, and one
director nominated by Samstock. Further, the Cozzi Shareholders, the MTLM
Shareholders and Samstock own approximately 36.4% of the issued and outstanding
shares of Common Stock as of August 31, 1998. As a result of their
shareholdings, the Cozzi Shareholders, the MTLM Shareholders and Samstock may be
deemed to have effective control over the affairs and management of the Company.
There can be no assurance that this influence will be used in a manner that is
consistent with the interests of the holders of the Notes.
The parties to the Stockholders Agreement also have agreed to vote for
proposals, if and when presented by the Company, to amend the Company's
organizational documents to require the approval of at least two-thirds of the
Board of Directors to take certain actions. If the Company's organizational
documents are amended to reflect these restrictions, and the Board of Directors
cannot agree on the Company's strategic direction, a minority of four dissenting
directors could prevent the Company from taking certain actions. Should the
Board of Directors be unable to act because a minority of dissenting directors
prevents it from taking a significant action, this impasse could have a material
adverse effect on the Company's results of operations and financial condition.
Certain decisions concerning the operations or financial structure of the
Company may present conflicts of interest between the Company's shareholders and
the holders of the Notes. For example, if the Company encounters financial
difficulties or is unable to pay its debts as they become due, the interests of
the Company's shareholders might conflict with those of the holders of the
Notes. The Company's shareholders also may have an interest in pursuing
acquisitions, divestitures, financings or other transactions that could enhance
their equity investment, even though such transactions might involve risk to the
holders of the Notes. Because the members of the Company's senior management
team are significant shareholders of the Company, any such conflict of interest
may be resolved in favor of the Company's shareholders to the detriment of the
holders of the Notes.
DEPENDENCE ON KEY PERSONNEL
The Company's operations to date have depended in large part on the skills
and efforts of its senior management team, including T. Benjamin Jennings, its
Chairman and Chief Development Officer, Gerard M. Jacobs, its Chief Executive
Officer, and Albert A. Cozzi, its President and Chief Operating Officer. In
addition, because the Company's senior management team (other than Mr. Cozzi)
has limited experience in the scrap metals recycling business, the Company
relies substantially on the experience of the management of its subsidiaries
with regard to day-to-day operations. While the Company has employment
agreements with Messrs. Jennings, Jacobs and Cozzi and certain members of its
management team at the subsidiary level, there can be no assurance that the
Company will be able to retain the services of any of the foregoing. The loss of
any member of its senior management team or a significant number of managers
could have a material adverse effect on the Company's efforts to manage and
integrate the Completed Acquisitions or future acquisitions and may also
adversely impact the Company's ability to implement its consolidation strategy.
DEPENDENCE ON SCRAP SUPPLIERS
The profitability of the Company's scrap recycling operations depends, in
part, on the availability of an adequate source of supply. The Company acquires
its scrap inventory from numerous sources. These suppliers generally are not
bound by long-term contracts and have no obligation to continue selling scrap
materials to
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<PAGE> 36
the Company. If a substantial number of scrap suppliers cease selling scrap
metals to the Company, the Company's results of operations or financial
condition would be materially and adversely affected.
CONCENTRATION OF CUSTOMERS AND CREDIT RISK
The Company's ten largest customers represented approximately 36.1% of
consolidated net sales for the three months ended June 30, 1998. Accounts
receivable balances from these customers represented approximately 33.6% of
consolidated accounts receivable at June 30, 1998. The loss of any one of the
Company's significant customers could adversely affect the Company's results of
operations or financial condition.
In connection with the sale of the Company's products, the Company
generally does not require collateral as security for customer receivables.
Certain of the Company's subsidiaries have significant balances owing from
customers that operate in cyclical industries and under leveraged conditions
that may impair the collectibility of these receivables. Failure to collect a
significant portion of amounts due on these receivables could have a material
adverse effect on the Company's results of operations or financial condition.
COMPETITION
The metals recycling industry is highly competitive and subject to
significant changes in overall market conditions. Certain of the Company's
competitors have substantially greater financial, marketing and other resources.
There can be no assurance that the Company will be able to obtain its desired
market share or compete effectively in its markets.
USE OF SCRAP ALTERNATIVES
The increased demand for scrap metals by the expanding mini-mill industry
has caused a tightness in the supply and demand balance for ferrous scrap. The
relative scarcity of ferrous scrap, particularly the "cleaner" grades, and its
high price have created opportunities for producers of alternatives to scrap
metals. Although these alternatives have not been a major factor in the industry
to date, there can be no assurance that the use of alternatives to scrap metals
will not proliferate if the prices for scrap metals continue to rise and if the
levels of available unprepared ferrous scrap continue to decrease. Any
significant increase in the use of scrap metals alternatives by current
consumers of processed scrap metals could have a material adverse effect on the
Company.
FRAUDULENT CONVEYANCE
The Company believes that the indebtedness represented by the Notes is
being incurred for proper purposes and in good faith and that, based on present
forecasts, asset valuations and other financial information, the Company is,
and, after the consummation of the Exchange Offer, the Company will be, solvent,
will have sufficient capital for carrying on its business and will be able to
pay its debts as they mature. Notwithstanding this belief, however, under
federal or state fraudulent transfer laws, if a court of competent jurisdiction
in a suit by an unpaid creditor or a representative of creditors (such as a
trustee in bankruptcy or a debtor-in-possession) were to find that the Company
(i) issued the Notes with the intent of hindering, delaying or defrauding
current or future creditors or (ii)(A) did not receive fair consideration (or
reasonably equivalent value) for incurring the indebtedness represented by the
Notes and (B) at the time of the incurrence of such indebtedness, the Company
(1) was insolvent or was rendered insolvent by reason of such incurrence, (2)
was engaged in a business or transaction for which its remaining assets
constituted unreasonably small capital or (3) intended to incur, or believed
that it would incur, debts beyond its ability to pay such debts as they matured,
then such court could, among other things, (i) void all or a portion of the
Company's obligations to the holders of the Notes, the effect of which would be
that the holders of the Notes may not be repaid in full, (ii) recover all or a
portion of the payments made to holders of the Notes and/or (iii) subordinate
the Company's obligations to the holders of the Notes to other existing and
future indebtedness of the Company to a greater extent than would otherwise be
the case, the effect of which would be to entitle such other creditors to be
paid in full before any payment could be made on the Notes. The measure of
insolvency for purposes of the foregoing will vary depending upon the law of the
relevant jurisdiction. Generally, however, a company would be considered
insolvent for purposes of the foregoing if the
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<PAGE> 37
sum of the company's debts is greater than all of the company's property at a
fair valuation, or if the present fair saleable value of the company's assets is
less than the amount that will be required to pay its probable liability on its
existing debts as they become absolute and mature. There can be no assurances as
to what standards a court would apply to determine whether the Company was
solvent at the relevant time or whether, whatever standard was applied, the
Notes would not be voided on another of the grounds set forth above.
In addition, the Guarantees may be subject to review under relevant federal
and state fraudulent conveyance and similar statutes in a bankruptcy or
reorganization case or a lawsuit by or on behalf of creditors of any of the
Guarantors. In such a case, the analysis set forth above would generally apply,
except that the Guarantees could also be subject to the claim that, because they
were incurred for the benefit of the Company (and only indirectly for the
benefit of the Guarantors), the obligations of the Guarantors thereunder were
incurred for less than reasonably equivalent value or fair consideration. A
court could void a Guarantor's obligation under its Guarantee, subordinate the
Guarantee to other indebtedness of a Guarantor or take other action detrimental
to the holders of the Notes.
ABSENCE OF PRIOR MARKET FOR NEW NOTES
The New Notes will constitute a new class of securities with no established
trading market. Although the New Notes will generally be permitted to be resold
or otherwise transferred by nonaffiliates of the Company without compliance with
the registration requirements under the Securities Act, the Company does not
intend to apply for a listing of the New Notes on any securities exchange or to
arrange for the New Notes to be quoted on the NASDAQ National Market or other
quotation system. The Initial Purchasers have advised the Company that they
intend to make a market in the New Notes; however, the Initial Purchasers are
not obligated to do so, and any market-making with respect to the New Notes may
be discontinued at any time without notice. As a result, there can be no
assurance that an active trading market for the New Notes will develop. If a
market were to develop, the New Notes could trade at prices that may be lower
than the initial market values thereof depending on many factors, including
prevailing interest rates and the markets for similar securities.
RESTRICTIONS ON RESALE
The Old Notes were offered and sold by the Company in a private offering
exempt from registration pursuant to the Securities Act and have been resold
pursuant to Rule 144A, Regulation S and certain other available exemptions under
the Securities Act. As a result, the Old Notes may not be reoffered or resold by
purchasers, except pursuant to an effective registration statement under the
Securities Act, or pursuant to an applicable exemption from such registration.
Based on interpretations by the staff of the Commission, the Company
believes that each holder (other than (i) a broker-dealer who purchased Old
Notes directly from the Company for resale pursuant to Rule 144A of the
Securities Act or any other available exemption under the Securities Act, (ii)
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act or (iii) a broker-dealer who acquired the Old Notes as a result
of market-making or other trading activities) who duly exchanges Old Notes for
New Notes in the Exchange Offer will receive notes that are freely transferable
under the Securities Act, provided, that such New Notes are acquired in the
ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any other person to
participate, in a distribution (within the meaning of the Securities Act) of the
New Notes. The Company has not, however, sought its own no-action letter from
the staff of the Commission regarding resales of the New Notes and there can be
no assurance that the staff of the Commission would make a similar determination
with respect to the resale of the New Notes. Any holder of Old Notes who is not
able to rely upon such staff interpretations must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any sale of such Old Notes, unless such sale is made pursuant to an exemption
from such requirements. See "Prospectus Summary--The Exchange Offer."
CERTAIN MARKET CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
To the extent that Old Notes are tendered and accepted for exchange
pursuant to the Exchange Offer, the trading market for Old Notes that remain
outstanding may be significantly more limited, which might
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<PAGE> 38
adversely affect the liquidity of the Old Notes not tendered for exchange. The
extent of the market therefor and the availability of price quotations would
depend upon a number of factors, including the number of holders of Old Notes
remaining at such time and the interest in maintaining a market in such Old
Notes on the part of securities firms. An issue of securities with a smaller
outstanding market value available for trading (the "float") may command a lower
price than would a comparable issue of securities with a greater float. As a
result, the market price for Old Notes that are not exchanged in the Exchange
Offer may be affected adversely to the extent that the amount of Old Notes
exchanged pursuant to the Exchange Offer reduces the float. The reduced float
also may make the trading price of the Old Notes that are not exchanged more
volatile. In addition, holders of Old Notes who do not exchange their Old Notes
for New Notes pursuant to the Exchange Offer will continue to be subject to
restrictions on transfer of such Old Notes contained in the legend thereon. In
general, the Old Notes may not be offered or sold unless registered under the
Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. The Company
does not currently anticipate that it will register the Old Notes under the
Securities Act. See "--Restrictions on Resale" and "The Exchange
Offer--Consequences of Failure to Exchange."
YEAR 2000
A year 2000 problem arises because some existing computer programs only
recognize the last two digits rather than four digits to define the applicable
year. Use of non-year 2000 compliant programs can result in system failures,
miscalculations or errors causing disruptions of operations or other business
failures, including, among other things, a potential inability to process
invoices or transactions or engage in other normal business activities.
The Company has experienced tremendous growth as a result of having
completed 24 acquisitions since April 1996. Essentially all of the Completed
Acquisitions operated on separate computer hardware, software, systems and
processes ("Information Systems"). In order to address the potential year 2000
problem, among other Information Systems challenges faced by the Company, in
fiscal 1998, the Company created an MIS Steering Committee. The MIS Steering
Committee has developed a plan for year 2000 compliance which includes four
major phases--assessment, remediation, testing and implementation.
The Company has substantially completed its assessment of the impact of the
year 2000 problem on its Information Systems. Based on this assessment, the
Company does not expect the cost of making the Company's Information Systems
year 2000 compliant to have a material adverse impact on the Company's financial
position or results of operations in future periods. The Company has completed
approximately 80% of its remediation phase for all of its significant
Information Systems, and estimates that it will complete software upgrades
and/or replacement by the end of the current fiscal year. To date, the Company
has completed approximately 20% of its testing and has implemented approximately
20% of the required remediation for such Information Systems. The testing and
implementation phases are targeted to be substantially complete by the end of
the second quarter of next fiscal year.
The Company has begun its assessment of the impact of year 2000 problems on
its non-information technology systems (such as telephones, processing equipment
or other equipment containing embedded technology such as microcontrollers)
("Non-IT Systems"). As part of the assessment, the Company has created an
equipment inventory database of Non-IT Systems to help with the assessment. The
Company believes assessment will be completed before the end of the current
fiscal year, and that remediation, testing and implementation will be completed
by the end of the second quarter of next fiscal year.
The Company is in the process of identifying third parties (i.e., suppliers
and service providers) with which it has a significant relationship that, in the
event of a year 2000 failure, could have a material adverse impact on its
financial position or results of operations. The Company expects that this
process will be on-going throughout the current and next fiscal year.
The Company believes that, as a result of these efforts, any year 2000
problem that it may become subject to will not be material, however there can be
no assurance that this will be the case. The Company is unable at this time to
state its "worst case" year 2000 scenario. A contingency plan in the event of
noncompliance is currently being developed.
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THE EXCHANGE OFFER
The following discussion sets forth or summarizes what the Company believes
are the material terms of the Exchange Offer, including those set forth in the
Letter of Transmittal distributed with this Prospectus. This Summary is
qualified in its entirety by reference to the full text of the documents
underlying the Exchange Offer, copies of which are filed as exhibits to the
Registration Statement of which this Prospectus is a part, and are incorporated
by reference herein.
PURPOSE AND EFFECT
The Old Notes were sold by the Company to the Initial Purchasers on May 13,
1998 (the "Closing Date"), pursuant to the Purchase Agreement. The Initial
Purchasers subsequently resold the Old Notes in reliance on Rule 144A and
Regulation S. The Company, the Guarantors and the Initial Purchasers also
entered into the Registration Rights Agreement, which provides that (i) the
Company will file an Exchange Offer Registration Statement with the Commission
on or prior to 60 days after the Closing Date, (ii) the Company will use
commercially reasonable efforts to have the Exchange Offer Registration
Statement declared effective by the Commission on or prior to 135 days after the
date on which such Exchange Offer Registration Statement is filed with the
Commission (which 135-day period shall be extended for a number of days equal to
the number of business days, if any, that the Commission is officially closed
during such period) and (iii) unless the Exchange Offer would not be permitted
by applicable law or Commission policy, the Company will commence the Exchange
Offer and use its commercially reasonable efforts to issue, on or prior to 25
business days after the date on which the Exchange Offer Registration Statement
is declared effective by the Commission, New Notes in exchange for all Old Notes
tendered prior thereto in the Exchange Offer. Pursuant to such Registration
Rights Agreement, the Company will endeavor to, within the applicable time
periods, register under the Securities Act all of the New Notes pursuant to a
registration statement under which the Company will offer each holder of Old
Notes the opportunity to exchange any and all of the outstanding Old Notes held
by such holder for New Notes in an aggregate principal amount equal to the
aggregate principal amount of Old Notes tendered for exchange by such holder.
Subject to limited exceptions, the Exchange Offer being made hereby, if
commenced and consummated within such applicable time periods, will satisfy
those requirements under the Registration Rights Agreement. In such event, Old
Notes not exchanged for New Notes in the Exchange Offer would remain outstanding
and would continue to accrue interest, but would generally not retain any rights
under the Registration Rights Agreement. Holders of Old Notes seeking liquidity
in their investment would have to rely on an exemption to the registration
requirements under the securities laws, including the Securities Act. This
Exchange Offer is intended to satisfy the Company's exchange offer obligations
under the Registration Rights Agreement.
TERMS OF THE EXCHANGE OFFER
The Company hereby offers, upon the terms and subject to the conditions set
forth herein and in the accompanying Letter of Transmittal, to exchange $1,000
in principal amount of the New Notes for each $1,000 in principal amount of the
outstanding Old Notes. The Company will accept for exchange any and all Old
Notes that are validly tendered on or prior to 5:00 p.m., New York City time, on
the Expiration Date. Tenders of the Old Notes may be withdrawn in accordance
with the procedures described under "--Withdrawal Rights" at any time prior to
5:00 p.m., New York City time, on the Expiration Date. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered for
exchange. However, the Exchange Offer is subject to certain customary conditions
that may be waived by the Company, and to the terms and provisions of the
Registration Rights Agreement. See "--Conditions of the Exchange Offer."
Old Notes may be tendered only in multiples of $1,000. Subject to the
foregoing, holders may tender less than the aggregate principal amount
represented by the Old Notes held by them, provided that they appropriately
indicate this fact on the Letter of Transmittal accompanying the tendered Old
Notes (or so indicate pursuant to the procedures for book-entry transfer).
As of the date of this Prospectus, $180 million in aggregate principal
amount of the Old Notes were outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about October 7, 1998, to all
holders of Old Notes known to the Company.
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<PAGE> 40
Because the Exchange Offer is for any and all Old Notes, the number of Old
Notes tendered and exchanged in the Exchange Offer will reduce the principal
amount of Old Notes outstanding. Following the consummation of the Exchange
Offer, holders who did not tender their Old Notes generally will not have any
further registration rights under the Registration Rights Agreement, and such
Old Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for such Old Notes could be adversely
affected. The Old Notes are currently eligible for sale pursuant to Rule 144A
through the Private Offering, Resales and Trading through Automated Linkages
("PORTAL") system. Because the Company anticipates that most holders of Old
Notes will elect to exchange such Old Notes for New Notes due to the absence of
restrictions on the resale of New Notes under the Securities Act, the Company
anticipates that the liquidity of the market for any Old Notes remaining after
the consummation of the Exchange Offer may be substantially limited. See "Risk
Factors--Certain Market Consequences of Failure to Exchange Old Notes."
The form and terms of the New Notes are generally the same as the form and
terms of the Old Notes except that (i) the New Notes have been registered under
the Securities Act and will not bear legends restricting the transfer thereof,
(ii) the holders of New Notes will not be entitled to any Additional Interest
under the terms of the Registration Rights Agreement and (iii) holders of New
Notes will not be entitled to certain other rights under the Registration Rights
Agreement. The New Notes will evidence the same debt as the Old Notes and will
be entitled to the benefits of the Indenture.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Old Notes and for the purposes of receiving the New Notes from the Company
and delivering New Notes to such holders.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders of Old Notes do not have any appraisal or dissenters' rights in
connection with the Exchange Offer.
Holders of Old Notes who tender in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"--Fees and Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR THE COMPANY MAKES ANY
RECOMMENDATION TO HOLDERS OF OLD NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING ALL OR ANY PORTION OF THEIR OLD NOTES PURSUANT TO THE EXCHANGE OFFER.
IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS
OF OLD NOTES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE PRINCIPAL AMOUNT OF OLD NOTES TO
TENDER, AFTER READING CAREFULLY THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL
AND CONSULTING WITH THEIR ADVISORS, IF ANY, BASED ON THEIR OWN FINANCIAL
POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The Exchange Offer shall remain open for a period of not less than 20
business days after notice is mailed to holders. The Expiration Date shall be
November 5, 1998 at 5:00 p.m., New York City time, unless the Company, in its
sole discretion, extends the Exchange Offer, in which case the Expiration Date
shall be the latest date and time to which the Exchange Offer is extended;
provided, that the Expiration Date will not be extended beyond November 19,
1998.
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In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will make a public
announcement thereof, by means of a press release or any other acceptable means,
each prior to 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date.
The Company expressly reserves the right, in its sole and absolute
discretion, (i) to delay accepting any Old Notes, (ii) to extend the Exchange
Offer, (iii) if any of the conditions set forth below under "Conditions of the
Exchange Offer" shall not have been satisfied, to terminate the Exchange Offer,
by giving oral or written notice of such delay, extension or termination to the
Exchange Agent, and (iv) to waive any condition or otherwise amend the terms of
the Exchange Offer in any manner. If such waiver or amendment constitutes a
material change to the Exchange Offer, the Company will promptly disclose such
waiver or amendment by means of a prospectus supplement that will be distributed
to the registered holders of the Old Notes, and the Company will extend the
Exchange Offer to the extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company may choose to make any public announcement and
subject to applicable law, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to the Dow Jones News Service.
CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, or any extension
of the Exchange Offer, the Company will not be required to accept for exchange,
or to exchange, any Old Notes for any New Notes (whether or not any Old Notes
have theretofore been accepted for exchange) if (A) any of the conditions set
forth in (i) to (iii) below has not been satisfied or (B) the condition set
forth in (iv) below has occurred or exists:
(i) the Old Notes shall have been duly tendered in accordance with
the terms of the Exchange Offer;
(ii) the Exchange Offer shall not violate any applicable law or any
applicable policy of the Commission;
(iii) all governmental approvals shall have been obtained, which
approvals the Company deems necessary for the consummation of the Exchange
Offer; and
(iv) an action or proceeding shall have been instituted or threatened
in any court or by any governmental agency which might materially impair
the ability of the Company to proceed with the Exchange Offer, or a
material adverse development shall have occurred in any existing action or
proceeding with respect to the Company.
If the Company determines in its sole and absolute discretion that any of
the foregoing events or conditions has not been satisfied or has occurred or
exists, the Company may, subject to applicable law, (i) waive any such
condition, (ii) amend the terms of the Exchange Offer in any respect, (iii)
extend the Exchange Offer and retain all Old Notes tendered prior to the
expiration of the Exchange Offer subject, however, to the rights of holders to
withdraw such Old Notes or (iv) terminate the Exchange Offer (whether or not any
Old Notes have theretofore been accepted for exchange). If such waiver or
amendment constitutes a material change to the Exchange Offer, the Company will
promptly disclose such waiver or amendment by means of a prospectus supplement
that will be distributed to the registered holders of the Old Notes, and the
Company will extend the Exchange Offer to the extent required by Rule 14e-1
under the Exchange Act.
The foregoing conditions are for the sole benefit of the Company and may be
waived by the Company in whole or in part at any time and from time to time in
its sole discretion. The failure by the Company at any time to exercise any of
the foregoing rights shall not be deemed a waiver of such rights and each such
right
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<PAGE> 42
shall be deemed an ongoing right which may be asserted at any time and from time
to time. Any determination by the Company concerning the events described above
will be final and binding upon all parties.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939.
TERMINATION OF CERTAIN RIGHTS
Holders of New Notes will not be and, upon consummation of the Exchange
Offer, holders of Old Notes who were permitted to participate in the Exchange
Offer will no longer be, entitled to (i) the right to receive Additional
Interest under the Registration Rights Agreement or (ii) certain other rights
under the Registration Rights Agreement intended for the holders of unregistered
securities; provided, that holders of Old Notes who are not permitted to
participate in the Exchange Offer or who do not receive fully tradeable New
Notes pursuant to the Exchange Offer, shall have the right to require the
Company to file a Shelf Registration Statement solely for the benefit of such
holders of Old Notes and will be entitled to receive Additional Interest
following the occurrence of a Registration Default in connection with the filing
of such Shelf Registration Statement. See "Registration Rights." Notwithstanding
anything to the contrary in the foregoing, Old Notes not tendered in the
Exchange Offer will remain outstanding and continue to accrue interest in
accordance with their terms.
ACCRUED INTEREST ON THE OLD NOTES
Holders whose Old Notes are accepted for exchange will have the right to
receive interest accrued thereon from the date of their original issuance or the
last interest payment date, as applicable, to, but not including, the date of
issuance of the New Notes, such interest to be payable with the first interest
payment on the New Notes. Interest on the Old Notes accepted for exchange, which
interest accrued at the rate of 10% per annum, will cease to accrue on the day
prior to the issuance of the New Notes.
PROCEDURES FOR TENDERING OLD NOTES
The tender of a holder's Old Notes as set forth below and the acceptance
thereof by the Company will constitute a binding agreement between the tendering
holder and the Company upon the terms and subject to the conditions set forth in
this Prospectus and in the accompanying Letter of Transmittal. Except as set
forth below, a holder who wishes to tender Old Notes for exchange pursuant to
the Exchange Offer must transmit a properly completed and duly executed Letter
of Transmittal, including all other documents required by such Letter of
Transmittal, to the Exchange Agent at the address set forth under "--The
Exchange Agent; Assistance" prior to 5:00 p.m., New York City time on the
Expiration Date. In addition, either (i) certificates of such Old Notes must be
received by the Exchange Agent along with the Letter of Transmittal, or (ii) a
timely confirmation of book-entry transfer of such Old Notes, if such procedure
is available, into the Exchange Agent's account at DTC pursuant to the procedure
for book-entry transfer described below, must be received by the Exchange Agent
prior to the Expiration Date, or (iii) the holder must comply with the
guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
ELIGIBLE HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED
MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. INSTEAD OF
DELIVERY BY MAIL, IT IS RECOMMENDED THAT THE ELIGIBLE HOLDER USE AN OVERNIGHT OR
HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
TIMELY DELIVERY. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE
COMPANY OR DTC. HOLDERS MAY
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<PAGE> 43
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT SUCH TENDER FOR SUCH HOLDER.
Any Beneficial Owner whose Old Notes are registered in the name of a
nominee, such as a broker, dealer, commercial bank, trust company, and who
wishes to tender Old Notes in the Exchange Offer should contact such registered
holder promptly and instruct such registered holder to tender on such Beneficial
Owner's behalf. If such Beneficial Owner wishes to tender directly, such
Beneficial Owner must, prior to completing and executing the Letter of
Transmittal and tendering Old Notes, either make appropriate arrangements to
register ownership of the Old Notes in such Beneficial Owner's name or obtain a
properly completed bond power from the registered holder. Beneficial Owners
should be aware that the transfer of registered ownership may take considerable
time.
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at DTC for the purposes of the Exchange Offer within two
business days after the date of this Prospectus, any financial institution that
is a participant in DTC's Book-Entry Transfer Facility system may make
book-entry delivery of the Old Notes by causing DTC to transfer such Old Notes
into the Exchange Agent's account in accordance with DTC's procedures for such
transfer. However, although delivery of the Old Notes may be effected through
book-entry transfer into the Exchange Agent's accountant at DTC, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other required documents, must in any
case, be delivered to and received by the Exchange Agent at its address set
forth under "--The Exchange Agent; Assistance" on or prior to the Expiration
Date, or the guaranteed delivery procedure set forth below must be complied
with, within the time period provided under such procedures. Delivery of
documents to DTC does not constitute delivery to the Exchange Agent.
Each signature on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined herein)
unless the Old Notes surrendered for exchange pursuant hereto are tendered (i)
by a registered holder of the Old Notes who has not completed either the box
entitled "Special Exchange Instructions" or the box entitled "Special Delivery
Instructions" in the Letter of Transmittal, or (ii) for the account of an
Eligible Institution. In the event that a signature on a Letter of Transmittal
or a notice of withdrawal, as the case may be, is required to be guaranteed,
such signature must be guaranteed by an Eligible Institution. If the Letter of
Transmittal is signed by a person other than the registered holder of the Old
Notes, the Old Notes surrendered for exchange must be endorsed or accompanied by
appropriate bond powers and a proxy which authorizes such person to tender the
Old Notes on behalf of the registered holder, in each case, signed as the name
of the registered holder, with the signature thereon guaranteed by an Eligible
Institution. The term "registered holder" as used herein with respect to the Old
Notes means any person in whose name the Old Notes are registered on the books
of the Registrar. The term "Eligible Institution" as used herein means a firm
which is a member of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., a commercial bank or trust
company having an office or correspondent in the United States or any other
"eligible guarantor institution" as such term is defined in Rule 17Ad-15 under
the Exchange Act.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of Old Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and all
Old Notes not properly tendered and to reject any Old Notes the Company's
acceptance of which might, in the judgment of the Company or its counsel, be
unlawful. The Company also reserves the absolute right to waive any defects or
irregularities or conditions of the Exchange Offer as to particular Old Notes
either before or after the Expiration Date (including the right to waive the
ineligibility of any holder who seeks to tender Old Notes in the Exchange
Offer). The interpretation of the terms and conditions of the Exchange Offer
(including the Letter of Transmittal and the instructions thereto) by the
Company shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes for exchange must be
cured within such period of time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Old Notes,
nor shall any of them incur any liability for failure to give
30
<PAGE> 44
notification of defects or irregularities with respect to tenders of Old Notes.
Tenders of the Old Notes will not be deemed to have been made until such
irregularities have been cured or waived.
If any Letter of Transmittal, endorsement, bond power, power of attorney or
any other document required by the Letter of Transmittal is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person
should so indicate when signing, and, unless waived by the Company, proper
evidence satisfactory to the Company, in its sole discretion, of such person's
authority so to act must be submitted with the Letter of Transmittal.
By tendering, each registered holder will represent to the Company, among
other things, that: (i) the holder is not an "affiliate" of the Company as
defined in Rule 405 of the Securities Act, (ii) the holder is not a
broker-dealer that acquired Old Notes directly from the Company in order to
resell them pursuant to Rule 144A of the Securities Act or any other available
exemption under the Securities Act, (iii) the holder will acquire the New Notes
in the ordinary course of business and (iv) the holder is not participating, and
does not intend to participate, and has no arrangement or understanding with any
person to participate, in the distribution of the New Notes. Any holder of Old
Notes that is unable to make these representations to the Company will not be
able to rely on the interpretations of the staff of the Commission described in
"--Resales of New Notes" and therefore will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Notes unless such sale is
made pursuant to an exemption from such requirements.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other documents required by the Letter of Transmittal to the
Exchange Agent on or prior to the Expiration Date or (iii) who cannot complete
the procedure for book-entry transfer on a timely basis, may tender their Old
Notes according to the guaranteed delivery procedures set forth in the Letter of
Transmittal. Pursuant to such procedures: (i) such tender must be made by or
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent must have received from the holder and the Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery (by facsimile
transmission, mail or hand delivery) setting forth the name and address of the
holder, the certificate or registration number or numbers of the tendered Old
Notes, and the principal amount of tendered Old Notes, stating that the tender
is being made thereby and guaranteeing that, at least within four (4) New York
Stock Exchange trading days after the Expiration Date, the tendered Old Notes, a
duly executed Letter of Transmittal (or facsimile thereof) and any other
required documents will be deposited by the Eligible Institution with the
Exchange Agent and (iii) such properly completed and executed documents required
by the Letter of Transmittal (or facsimile thereof) and the tendered Old Notes
in proper form for transfer (or confirmation of a book-entry transfer of such
Old Notes into the Exchange Agent's account at DTC) must be received by the
Exchange Agent at least within four (4) New York Stock Exchange trading days
after the Expiration Date.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all the conditions to the Exchange Offer,
the Company will accept any and all Old Notes that are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date.
The New Notes issued pursuant to the Exchange Offer will be delivered as
promptly as practicable after acceptance of the Old Notes. For purposes of the
Exchange Offer, the Company shall be deemed to have accepted validly tendered
Old Notes, when, as, and if the Company has given oral or written notice thereof
to the Exchange Agent.
In all cases, issuances of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of such Old Notes, a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and all other required documents
(or of confirmation of a book-entry transfer of such Old Notes into the Exchange
Agent's account at DTC); provided, that the Company reserves the absolute right
to waive any defects or irregularities in the tender or conditions of the
Exchange Offer. If any tendered Old Notes are not accepted for any reason, such
unaccepted
31
<PAGE> 45
Old Notes will be returned without expense to the tendering holder thereof as
promptly as practicable after the expiration or termination of the Exchange
Offer.
WITHDRAWAL RIGHTS
Tenders of the Old Notes may be withdrawn by delivery of a written or
facsimile transmission notice to the Exchange Agent, at its address set forth
herein, at any time prior to 5:00 p.m., New York City time, on the Expiration
Date after which tenders of Old Notes are irrevocable. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Old
Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including the certificate or registration number or numbers and
principal amount of such Old Notes, as applicable or, in the case of notes
transferred by book-entry transfer, the name and number of the account at DTC to
be credited), (iii) be signed by the Depositor in the same manner as the
original signature on the Letter of Transmittal by which such Old Notes were
tendered (including any required signature guarantees) or be accompanied by a
bond power in the name of the person withdrawing the tender, in satisfactory
form as determined by the Company in its sole discretion, duly executed by the
registered holder, with the signature thereon guaranteed by an Eligible
Institution together with the other documents required upon transfer by the
Indenture, (iv) specify the name in which such Old Notes are to be
re-registered, if different from the Depositor, pursuant to such documents of
transfer and (v) include a statement that such holder is withdrawing his
election to have such Old Notes exchanged. All questions as to the validity,
form and eligibility (including time of receipt) of such notices will be
determined by the Company, in its sole discretion. The Old Notes so withdrawn
will be deemed not to have been validly tendered for exchange for purposes of
the Exchange Offer and no New Notes will be issued with respect thereto unless
the Old Notes so withdrawn are validly retendered. Any Old Notes which have been
tendered for exchange but which are withdrawn will be returned to the holder
thereof without cost to such holder as promptly as practicable after withdrawal.
Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "--Procedures for Tendering Old Notes" at any time on
or prior to the Expiration Date.
THE EXCHANGE AGENT; ASSISTANCE
LaSalle National Bank has been appointed the Exchange Agent for the
Exchange Offer. All tendered Old Notes, executed Letters of Transmittal and
other related documents should be directed to the Exchange Agent. Questions and
requests for assistance and requests for additional copies of the Prospectus,
the Letter of Transmittal and other related documents should be addressed to the
Exchange Agent as follows:
By Hand, Registered or Certified Mail or Overnight Courier:
LaSalle National Bank
135 South LaSalle Street
Room 1960
Chicago, IL 60603
Attention: Erik R. Benson
By Facsimile:
312-904-2236
Attention: Erik R. Benson
Confirm by Telephone 312-904-2970
DELIVERY OF DOCUMENTS TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF DOCUMENTS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY OF SUCH DOCUMENTS.
32
<PAGE> 46
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail. However, additional solicitations may be
made by facsimile, telephone or in person by officers and regular employees of
the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptance of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith and pay
other registration expenses, including fees and expenses of the Trustee, filing
fees, blue sky fees and printing and distribution expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered holder of the Old Notes tendered or if
a transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
as reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss will be recognized by the Company for accounting
purposes in connection with the Exchange Offer. The expenses of the Exchange
Offer will be amortized over the term of the New Notes.
RESALES OF NEW NOTES
Upon consummation of the Exchange Offer, holders of Old Notes that were not
prohibited from participating in the Exchange Offer and did not tender their Old
Notes will generally not have any registration rights under the Registration
Rights Agreement with respect to such nontendered Old Notes and such Old Notes
will continue to be subject to the restrictions on transfer contained in the
legend thereon. In general, the Old Notes may not be offered or sold unless
registered under the Securities Act and applicable state securities laws, except
pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Company does not
currently anticipate that it will register the Old Notes under the Securities
Act.
The Company is making the Exchange Offer in reliance on the position of the
staff of the Commission as set forth in certain interpretive letters addressed
to third parties in other transactions. However, the Company has not sought its
own interpretive letter and there can be no assurance that the staff of the
Commission would make a similar determination with respect to the Exchange Offer
as it has in such interpretive letters to third parties. Based on these
interpretations by the staff of the Commission, the Company believes that New
Notes issued pursuant to the Exchange Offer to a holder in exchange for Old
Notes may be offered for resale, resold and otherwise transferred by a holder
(other than (i) a broker-dealer who purchased Old Notes directly from the
Company for resale pursuant to Rule 144A or any other available exemption under
the Securities Act, (ii) an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act or (iii) a broker-dealer who acquired the Old
Notes as a result of market-making or other trading activities), without further
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided, that such holder is acquiring the New Notes in the
ordinary course of business and is not participating, and has no arrangement or
understanding with any person to participate, in the distribution of the New
Notes. Any holder wishing to accept the Exchange Offer must represent to the
Company, as required by the Registration Rights Agreement, that (i) it is not an
"affiliate" of the Company as defined in Rule 405 of the Securities Act, (ii) it
is not a broker-dealer that acquired Old Notes directly from the Company in
order to resell them
33
<PAGE> 47
pursuant to Rule 144A of the Securities Act or any other available exemption
under the Securities Act, (iii) it will acquire the New Notes in its ordinary
course of business and (iv) it is not participating, and does not intend to
participate, and has no arrangement or understanding with any person to
participate, in the distribution of the New Notes. Any holder of Old Notes that
is unable to make these representations to the Company will not be able to rely
on the interpretations of the staff of the Commission described above and
therefore will be required to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or other
transfer of such Old Notes unless such sale is made pursuant to an exemption
from such requirements.
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it acquired the Old Notes for its own
account as a result of market-making activities or other trading activities and,
because it may be deemed a statutory underwriter, must agree that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by the staff of the Commission in
the interpretive letters referred to above, the Company believes that Restricted
Broker-Dealers may fulfill their prospectus delivery requirements with respect
to the New Notes received upon exchange of such Old Notes (other than Old Notes
which represent an unsold allotment from the original sale of the Old Notes)
with a prospectus meeting the requirements of the Securities Act, which may be
the prospectus prepared for an exchange offer so long as it contains a
description of the plan of distribution with respect to the resale of such New
Notes. Accordingly, this Prospectus, as it may be amended or supplemented from
time to time, may be used by a Restricted Broker-Dealer during the period
referred to below in connection with resales of New Notes received in exchange
for Old Notes where such Old Notes were acquired by such Restricted
Broker-Dealer for its own account as a result of market-making or other trading
activities. Subject to certain provisions and time limitations set forth in the
Registration Rights Agreement, the Company has agreed that this Prospectus, may
be used by a Restricted Broker-Dealer in connection with resales of such New
Notes. See "Plan of Distribution." However, a Restricted Broker-Dealer who
intends to use this Prospectus in connection with the resale of New Notes
received in exchange for Old Notes pursuant to the Exchange Offer must notify
the Company, or cause the Company to be notified, on or prior to the Expiration
Date, that it is a Restricted Broker-Dealer. Such notice may be given in the
space provided for that purpose in the Letter of Transmittal or may be delivered
to the Exchange Agent at one of the addresses set forth herein under "--The
Exchange Agent; Assistance." A Restricted Broker-Dealer who delivers this
Prospectus to purchasers in connection with resales of New Notes will be subject
to certain of the civil liabilities under the Securities Act and will be bound
by the provisions of the Registration Rights Agreement (including certain
indemnification rights and obligations). Any Restricted Broker-Dealer who is an
"affiliate" of the Company may not rely on such interpretive letters and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
In that regard, each Restricted Broker-Dealer who surrenders Old Notes
pursuant to The Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company of the
occurrence of any event or the discovery of any fact which makes any statement
contained in this Prospectus untrue in any material respect or which causes this
Prospectus to omit to state a material fact necessary in order to make the
statements contained herein, in light of the circumstances under which they were
made, not misleading or of the occurrence of certain other events specified in
the Registration Rights Agreement, such Restricted Broker-Dealer will suspend
the sale of New Notes pursuant to this Prospectus until the Company has amended
or supplemented this Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to such Restricted
Broker-Dealer or the Company has given notice that the sale of the New Notes may
be resumed, as the case may be.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who are permitted to participate in the Exchange Offer
and who do not tender their Old Notes generally will not have any further
registration rights under the Registration Rights Agreement or
34
<PAGE> 48
otherwise. Accordingly, any holder that does not exchange such holder's Old
Notes for New Notes will continue to hold the untendered Old Notes and will be
entitled to all the rights and limitations applicable thereto under the
Indenture, except to the extent that such rights or limitations, by their terms,
terminate or cease to have further effectiveness as a result of the Exchange
Offer.
The Old Notes that are not exchanged for New Notes pursuant to the Exchange
Offer will continue to be subject to the restrictions on transfer contained in
the legend thereon. In general, the Old Note may not be offered or sold, unless
registered under the Securities Act, except pursuant to an exemption from, or in
a transaction not subject to, the Securities Act and applicable state securities
laws. The Company does not currently anticipate that it will register the Old
Notes under the Securities Act. Accordingly, such Old Notes may be resold only
(i) to the Company (upon redemption thereof or otherwise), (ii) pursuant to an
effective registration statement under the Securities Act, (iii) so long as the
Old Notes are eligible for resale pursuant to Rule 144A to a Qualified
Institutional Buyer (as defined in the Securities Act) in a transaction meeting
the requirements of Rule 144A, (iv) outside the United States to a foreign
person pursuant to the exemption from the registration requirements of the
Securities Act provided by Regulation S, (v) to an institutional "accredited
investor" (as defined in the Securities Act) in a transaction exempt from the
registration requirements of the Securities Act, in each case in accordance with
any applicable securities laws of any state of the United States or other
applicable jurisdiction, or (vi) pursuant to any other available exemption from
the registration requirements of the Securities Act.
MISCELLANEOUS
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. Holders of the Old Notes are urged to
consult their financial and tax advisors in making their own decisions on what
action to take.
The Company may in the future seek to acquire untendered Old Notes, to the
extent permitted by applicable law, in open market or privately negotiated
transactions, through subsequent exchange offers or otherwise. The Company has
no present plans to acquire any Old Notes that are not tendered in the Exchange
Offer or to file a registration statement to permit resales of any untendered
Old Notes.
HOLDERS OF OLD NOTES WILL NOT HAVE DISSENTERS' RIGHTS OR APPRAISAL RIGHTS
IN CONNECTION WITH THE EXCHANGE OFFER.
35
<PAGE> 49
USE OF PROCEEDS
There will be no proceeds to the Company from the exchange of the Old Notes
for New Notes pursuant to the Exchange Offer.
The net proceeds from the sale of the Old Notes in the Offering were
approximately $174.6 million, which the Company used to (a) repay approximately
$119.0 million outstanding under the Company's Senior Credit Facility, (b) repay
approximately $19.1 million of notes payable to related parties, and (c) fund
working capital and acquisitions.
The following table sets forth the pro forma sources and uses of funds as
of June 30, 1998, in connection with the Company's acquisition of Naporano:
<TABLE>
<CAPTION>
AMOUNT
-------------
(IN MILLIONS)
<S> <C>
SOURCES:
Existing cash............................................... $12.2
Borrowings under the Senior Credit Facility................. 65.2
-----
$77.4
=====
USES:
Cash consideration paid to the former shareholders of
Naporano, net of $6.6 million cash acquired............... $77.4
=====
</TABLE>
36
<PAGE> 50
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of June 30, 1998 and on a pro forma basis to give effect to the
acquisition of Naporano. See "Use of Proceeds." The pro forma capitalization
does not give effect to insignificant acquisitions as defined in Regulation S-X.
The information set forth below should be read in conjunction with the Financial
Statements and notes thereto.
<TABLE>
<CAPTION>
AS OF
JUNE 30, 1998
------------------
ACTUAL PRO FORMA
------ ---------
(IN MILLIONS)
<S> <C> <C>
Cash and equivalents(1)..................................... $ 12.2 $ --
====== ======
Debt (including current portion):
Third party debt.......................................... $ 3.0 $ 4.6
Related party debt........................................ 22.4 22.4
Senior Credit Facility.................................... -- 65.2
Notes..................................................... 180.0 180.0
------ ------
Total debt............................................. 205.4 272.2
Stockholders' equity:
Convertible preferred stock............................... $ 30.9 $ 30.9
Common stock, warrants and additional paid-in
capital(2)............................................. 257.8 276.3
Accumulated deficit....................................... (29.0) (29.0)
------ ------
Total stockholders' equity............................. 259.7 278.2
------ ------
Total capitalization................................... $465.1 $550.4
====== ======
</TABLE>
- ------------------------
(1) See Note (1) to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
(2) The increase in the balance is due to the issuance of Common Stock in
connection with the Naporano acquisition. See "Notes to Unaudited Pro Forma
Condensed Consolidated Balance Sheet."
37
<PAGE> 51
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
The following table sets forth selected historical and pro forma financial
data of the Company for the periods indicated. The historical data of the
Company has been restated to reflect the merger with Bluestone as a pooling of
interests. The selected historical data as of and for each of the three fiscal
years in the period ended October 31, 1995, the five months ended March 31, 1996
and as of and for each of the two fiscal years in the period ended March 31,
1998 were derived from (i) the audited consolidated financial statements of the
Company and (ii) for the continuing operations data as of and for each of the
two years in the period ended October 31, 1994, from the unaudited historical
financial statements of Bluestone. The selected historical financial data as of
and for the three months ended June 30, 1997 and 1998, were derived from the
unaudited interim financial statements of the Company. In the opinion of
management, such unaudited interim financial statements contain all adjustments
(consisting of only normal recurring items) necessary to present fairly the
Company's financial position and results of operations as of and for the periods
presented. The information contained in this table should be read in conjunction
with the Pro Forma Financial Data appearing elsewhere in this Prospectus and the
Financial Statements and related notes thereto. The financial data included in
the table below reflect the results of the Company's prior operations of
designing, manufacturing and marketing electronic presentation products and
color printers and related consumable products as discontinued operations. The
Company sold the assets relating to these operations in July and December 1996.
See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
FIVE MONTHS
ENDED
FISCAL YEARS ENDED OCTOBER 31, MARCH 31,
------------------------------- -----------
HISTORICAL 1993 1994 1995 1996
- ---------- ------ ----- ------ -----------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1):
Net sales................................................ $ 40.4 $64.8 $112.8 $ 36.3
Cost of sales............................................ 38.9 61.3 105.0 34.9
------ ----- ------ ------
Gross profit........................................... 1.5 3.5 7.8 1.4
General and administrative expenses...................... 2.2 2.0 6.3 2.3
Depreciation and amortization............................ 0.2 0.1 0.1 0.1
------ ----- ------ ------
Operating income (loss) from continuing operations..... (0.9) 1.4 1.4 (1.0)
Interest expense......................................... 0.3 0.4 1.2 0.5
Income (loss) from joint ventures........................ -- 0.5 1.0 (0.3)
Other income, net........................................ 0.6 0.4 0.6 0.2
------ ----- ------ ------
Income (loss) from continuing operations before
taxes................................................ (0.6) 1.9 1.8 (1.6)
Provision (benefit) for income taxes..................... (0.1) -- 0.7 (0.7)
Net income (loss) from continuing operations........... (0.5) 1.9 1.1 (0.9)
------ ----- ------ ------
Net income (loss) from discontinued operations........... (0.2) (0.4) (2.7) --
------ ----- ------ ------
Net income (loss) applicable to Common Stock........... $ (0.7) $ 1.5 $ (1.6) $ (0.9)
====== ===== ====== ======
Net income (loss) from continuing operations applicable
to Common Stock
Basic................................................ $(0.08) $0.31 $ 0.18 $(0.15)
Diluted.............................................. $(0.08) $0.31 $ 0.18 $(0.15)
Cash dividends per common share.......................... $ 0.20 $0.20 $ 0.15 $ 0.00
OTHER FINANCIAL DATA(1):
Adjusted EBITDA(3)....................................... $ (0.7) $ 2.0 $ 2.5 $ (1.2)
Capital expenditures..................................... 0.0 0.1 0.7 0.1
Ratio of earnings to Fixed Charges(4).................... -- 5.4 2.5 --
BALANCE SHEET DATA (AT END OF PERIOD)(1):
Cash and equivalents..................................... $ (0.4) $ 0.6 $ 3.1 $ 3.2
Working capital.......................................... 11.9 10.7 11.1 11.1
Total assets............................................. 22.5 30.6 39.1 31.7
Total debt (including current maturities)................ 2.7 8.1 17.6 11.6
Convertible preferred stock.............................. -- -- -- --
Common stockholder's equity.............................. 15.8 15.8 12.6 12.4
</TABLE>
See Notes to Selected Historical and Pro Forma Financial Data
38
<PAGE> 52
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA -- (CONTINUED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEARS ENDED ENDED
MARCH 31, JUNE 30,
------------------- -------------------
HISTORICAL 1997 1998 1997 1998
---------- ------ ------- ------ -------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1):
Net sales................................................. $141.8 $ 570.0 $ 82.1 $ 214.9
Cost of sales............................................. 130.4 517.9 74.7 195.2
------ ------- ------ -------
Gross profit............................................ 11.4 52.1 7.4 19.7
General and administrative expenses....................... 10.4 28.2 4.2 11.5
Depreciation and amortization............................. 2.5 10.3 1.3 4.4
Non-recurring expenses(2)................................. -- 33.7 -- 0.9
------ ------- ------ -------
Operating income (loss) from continuing operations...... (1.5) (20.1) 1.9 2.9
Interest expense.......................................... 2.3 10.0 1.5 4.9
Income (loss) from joint ventures......................... 0.4 0.4 0.1 (0.2)
Other income, net......................................... 0.4 0.4 0.1 0.6
------ ------- ------ -------
Income (loss) from continuing operations before taxes... (3.0) (29.3) 0.6 (1.6)
Provision (benefit) for income taxes...................... (0.9) (0.5) 0.3 (0.5)
------ ------- ------ -------
Net income (loss) from continuing operations............ (2.1) (28.8) 0.3 (1.1)
Net income from discontinued operations................... 0.8 0.2 0.1 --
Extraordinary charge for early retirement of debt, net of
taxes................................................... -- -- -- 0.9
Preferred stock dividends................................. -- 7.1 -- 0.4
------ ------- ------ -------
Net income (loss) applicable to Common Stock............ $ (1.3) $ (35.7) $ 0.4 $ (2.4)
====== ======= ====== =======
Net income (loss) from continuing operations applicable to
Common Stock
Basic................................................... $(0.21) $ (1.73) $ 0.02 $ (0.05)
Diluted................................................. $(0.21) $ (1.73) $ 0.02 $ (0.05)
Cash dividends per common share........................... $ 0.00 $ 0.00 $ 0.00 $ 0.00
OTHER FINANCIAL DATA(1):
Adjusted EBITDA(3)........................................ $ 1.4 $ 24.3 $ 3.3 $ 8.0
Capital expenditures...................................... 3.3 7.6 1.0 4.8
Ratio of earnings to Fixed Charges(4)..................... -- -- 1.3 --
BALANCE SHEET DATA (AT END OF PERIOD)(1):
Cash and equivalents...................................... $ 5.8 $ 4.5 $ 12.2
Working capital (deficit)................................. (9.7) 101.6 112.2
Total assets.............................................. 94.7 502.4 559.9
Total debt (including current maturities)................. 48.1 151.5 205.4
Convertible preferred stock............................... -- 33.0 30.9
Common stockholder's equity............................... 27.2 219.8 228.8
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR THREE MONTHS
ENDED ENDED
PRO FORMA MARCH 31, 1998 JUNE 30, 1998
--------- -------------- -------------
<S> <C> <C> <C> <C>
PRO FORMA STATEMENT OF OPERATIONS DATA:
Net sales............................................... $1,020.0 $255.1
Interest expense........................................ 26.9 6.8
PRO FORMA OTHER FINANCIAL DATA:
Pro Forma Adjusted EBITDA(5)............................ $ 43.1 $ 9.7
Net cash interest expense(6)............................ 25.1 6.3
Ratio of Pro Forma Adjusted EBITDA to net cash interest
expense............................................... 1.7 1.5
Ratio of earnings to fixed charges(4)................... -- --
PRO FORMA BALANCE SHEET DATA (AT END OF PERIOD):
Cash and equivalents.................................... $ --
Working capital......................................... 117.3
Total assets............................................ 653.2
Total debt (including current maturities)............... 272.2
Convertible preferred stock............................. 30.9
Common stockholders' equity............................. 247.3
</TABLE>
See Notes to Selected Historical and Pro Forma Financial Data
39
<PAGE> 53
NOTES TO SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(1) Operating results for fiscal 1993, 1994 and 1995, and the five month
transitional period ended March 31, 1996, have been restated to reflect the
results of the Company's prior operations as discontinued operations. The
Selected Historical and Pro Forma financial information as of and for each
of the three fiscal years in the period ended October 31, 1995, the five
months ended March 31, 1996, as of and for each of the two fiscal years in
the period ended March 31, 1998 and for the three months ended June 30,
1998, has also been restated to reflect the merger with Bluestone as a
pooling of interests.
(2) During the fiscal year ended March 31, 1998, the Company recorded the
following non-recurring pre-tax charges (in millions):
<TABLE>
<S> <C>
Non-cash warrant compensation............................... $19.1(a)
Severance and other termination benefits.................... 2.8(b)
EMCO Recycling shut-down.................................... 11.8(c)
-----
$33.7
=====
</TABLE>
(a) On December 1, 1997, the Company issued non-recurring, fully vested
warrants to purchase 1,655,000 shares of Common Stock at exercise prices
ranging from $4.00 per share to $12.00 per share. These warrants were
issued to certain officers, employees and an outside director. The
warrants, for accounting purposes, were valued using the "intrinsic
value method" as prescribed under Accounting Principles Board ("APB")
No. 25, "Accounting for Stock Based Compensation".
(b) On December 1, 1997, the Company entered into a Separation Agreement
and a Stock Warrant Settlement Agreement with a former officer resulting
in a non-recurring charge totaling $2.8 million comprised of (a) $0.9
million of cash payments, (b) an accrual of $0.2 million for other
benefits under the Separation Agreement, and (c) $1.7 million
representing the value (calculated in accordance with APB No. 25) of
warrants issued to purchase 200,000 shares of Common Stock.
(c) Upon completion of the Cozzi Iron & Metal acquisition in December
1997, the Company adopted a formal plan to shut down its EMCO Recycling
operations by transferring certain of EMCO Recycling's assets to the
Company's Salt River facility, which the Company operates under the
Metal Management Arizona name. In connection with the plan to shut down
EMCO Recycling, the Company recorded a pre-tax charge of approximately
$11.8 million, comprised of $9.3 million for the impairment of EMCO
Recycling goodwill, $2.0 million for the write-down to fair value (less
selling costs) of the EMCO Recycling's fixed assets to be sold or
otherwise abandoned, and $0.5 million for other exit-related costs. The
cost of transferring EMCO Recycling's remaining assets to Salt River
will be expensed as incurred. The exit plan is expected to be completed
by December 31, 1998.
During the three months ended June 30, 1998, the Company recorded merger
expenses of approximately $0.9 million in connection with the merger with
Bluestone.
(3) Adjusted EBITDA represents net income from continuing operations plus
interest expense (including amortization of debt issuance costs), taxes,
depreciation and amortization. Adjusted EBITDA also excludes historical
non-recurring expenses and other non-operating income and expenses.
Adjusted EBITDA is presented here to provide additional information about
the Company's ability to meet its future debt service, capital expenditure
and working capital requirements. Adjusted EBITDA is not a measure of
financial performance under GAAP and should not be considered as an
alternative either to net income as an indicator of the Company's operating
performance, or to cash flows as a measure of the Company's liquidity.
Items excluded from Adjusted EBITDA, such as non-recurring expenses,
depreciation and amortization, are significant components of the Company's
financial statements and should be considered in assessing the financial
performance of the Company. Adjusted EBITDA as defined in this Prospectus
may differ from similarly titled measures presented by other companies.
(4) For purposes of the computation, the ratio of earnings to fixed charges has
been calculated by dividing (i) pre-tax income (loss) from continuing
operations plus fixed charges by (ii) fixed charges. Fixed
40
<PAGE> 54
NOTES TO SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA -- (CONTINUED)
charges are equal to interest expense plus the portion of the rent expense
estimated to represent interest expense. During the following periods, the
deficiency of earnings to fixed charges was as follows (in millions):
<TABLE>
<CAPTION>
FISCAL YEAR FIVE MONTHS THREE MONTHS
ENDED ENDED FISCAL YEARS ENDED MARCH 31, ENDED
OCTOBER 31, MARCH 31, ----------------------------- JUNE 30,
1993 1996 1997 1998 1998
- ----------- ----------- --------- ----------------- ------------
<S> <C> <C> <C> <C>
$0.6 $1.6 $3.0 $29.3 $1.6
</TABLE>
During the following pro forma periods, the deficiency of earnings to fixed
charges was as follows (in millions):
FISCAL YEAR
ENDED
MARCH 31, 1998
$33.4
Quarter
Ended
June 30, 1998
$5.8
(5) Pro Forma Adjusted EBITDA represents Adjusted EBITDA after giving effect to
the Pro Forma Operating Statement Acquisitions as if they had occurred on
April 1, 1997 and the following related items: contractual changes in
management compensation, changes in inventory valuation from a LIFO basis
to a FIFO basis to conform to the Company's accounting policy for inventory
valuation and an adjustment to reflect lease expense related to real estate
not purchased from Aerospace.
41
<PAGE> 55
NOTES TO SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA -- (CONTINUED)
(continued on next page)
(5) (continued)
The following table presents a reconciliation of Adjusted EBITDA to Pro
Forma Adjusted EBITDA for the following periods (in millions):
<TABLE>
<CAPTION>
FISCAL YEAR THREE MONTHS
ENDED ENDED
MARCH 31, JUNE 30,
1998 1998
----------- ------------
<S> <C> <C>
Metal Management historical Adjusted EBITDA(a).............. $24.3 $8.0
Pro Forma Operating Statement Acquisitions Adjusted
EBITDA(b)
Reserve Iron & Metal...................................... $ 0.4 --
Isaac Group............................................... (2.0) --
Proler Southwest.......................................... 0.5 --
Cozzi Iron & Metal........................................ 5.1 --
Aerospace................................................. 2.6 --
Naporano.................................................. 11.3 1.7
----- ----
$17.9 $1.7
----- ----
$42.2 $9.7
Pro Forma Adjustments:
Inventory valuation(c)
Isaac Group............................................ 0.2 --
Aerospace.............................................. (0.3) --
----- ----
$(0.1) $ --
Management compensation(d)
Isaac Group............................................ 0.2 --
Proler Southwest....................................... 0.3 --
Aerospace.............................................. 0.7 --
----- ----
$ 1.2 $ --
Real estate lease expense(e)
Aerospace.............................................. $(0.2) $ --
----- ----
Total Adjustments.................................... $ 0.9 $ --
----- ----
Total Pro Forma Adjusted EBITDA...................... $43.1 $9.7
===== ====
</TABLE>
- ------------------------
(a) Represents Adjusted EBITDA for all periods from and after the date of
acquisition for all Pro Forma Operating Statement Acquisitions closed
prior to March 31, 1998 or, as applicable, June 30, 1998.
(b) Represents Adjusted EBITDA up to the date each Pro Forma Operating
Statement Acquisition was acquired by the Company.
(c) Represents change in inventory valuation from a LIFO basis to a FIFO
basis to conform to the Company's accounting policy.
(d) Represents contractual reduction in management compensation.
(e) Represents lease expense on real estate not purchased from Aerospace.
(6) Net cash interest expense is defined as interest expense less amortization
of debt issuance costs.
42
<PAGE> 56
PRO FORMA FINANCIAL DATA
(UNAUDITED)
The following unaudited pro forma condensed consolidated balance sheet of
the Company gives effect to borrowings under the Senior Credit Facility and to
the acquisition of Naporano as if such transactions had occurred on June 30,
1998 (the "Pro Forma Balance Sheet Transactions"). The unaudited pro forma
condensed consolidated balance sheet does not give effect to acquisitions that
are not significant as defined by Regulation S-X. The following unaudited pro
forma condensed consolidated statements of operations of the Company give effect
to the Offering, borrowings under the Senior Credit Facility, the application of
the net proceeds therefrom, the Pro Forma Operating Statement Acquisitions and
certain equity transactions as if such transactions had occurred on April 1,
1997.
The unaudited pro forma condensed consolidated statements of operations do
not reflect the operating results from discontinued operations or insignificant
acquisitions. The discontinued operations include the Company's prior operations
of designing, manufacturing and marketing electronic presentation products and
color printers and related consumable products which were sold in July and
December 1996.
The following acquisitions (collectively, the "Pro Forma Operating
Statement Acquisitions") are presented in the Company's historical condensed
consolidated statements of operations from the effective date of each
acquisition. The effective date of each Pro Forma Operating Statement
Acquisition is as follows:
<TABLE>
<CAPTION>
ACQUISITION EFFECTIVE DATE
----------- --------------
<S> <C>
Reserve Iron & Metal........................................ 5/1/97
Isaac Group................................................. 6/23/97
Proler Southwest............................................ 9/1/97
Cozzi Iron & Metal.......................................... 12/1/97
Aerospace................................................... 1/20/98
Naporano.................................................... 7/1/98
</TABLE>
The accompanying unaudited pro forma condensed consolidated financial
statements have been derived from:
a. The Company's unaudited condensed consolidated balance sheet at June
30, 1998, audited consolidated statement of operations for the year
ended March 31, 1998 (restated to reflect the merger with Bluestone as
a pooling of interests) and unaudited condensed consolidated statement
of operations for the three months ended June 30, 1998;
b. Reserve Iron & Metal's unaudited statement of income for the one month
ended April 30, 1997;
c. The unaudited statements of operations for the twelve weeks ended June
23, 1997 of The Isaac Corporation and Ferrex Trading Corporation;
d. Proler Southwest's unaudited combined statement of operations for the
five months ended August 31, 1997;
e. Cozzi Iron & Metal's unaudited consolidated statement of operations
for the eight months ended November 30, 1997;
f. Aerospace's unaudited consolidated statement of income and retained
earnings for the period ended January 20, 1998; and
g. Naporano's audited balance sheet at June 30, 1998, unaudited statement
of operations for the twelve months ended March 31, 1998 and unaudited
statement of operations for the three months ended June 30, 1998.
The excess of the acquisition cost over the fair value (as estimated by the
Company) of the net assets of Naporano has been allocated to goodwill. The
Company considers all intangible assets in the allocation of
43
<PAGE> 57
PRO FORMA FINANCIAL DATA -- CONTINUED
(UNAUDITED)
purchase price. Such allocation of the purchase price may change upon the final
determination of the fair value of assets acquired (including other intangibles)
and liabilities assumed.
Certain amounts presented in the historical financial statements of the Pro
Forma Operating Statement Acquisitions have been reclassified in the pro forma
presentation to conform to the Company's operating statement presentation.
The unaudited pro forma condensed consolidated financial statements are
presented for comparative purposes only and do not purport to be indicative of
the combined financial position or results of operations which would have been
realized had the transactions reflected therein been consummated as of the date
or during the periods for which the unaudited pro forma financial statements are
presented or for any future period or date.
44
<PAGE> 58
METAL MANAGEMENT, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AT JUNE 30, 1998
<TABLE>
<CAPTION>
NAPORANO PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Cash............................................ $ 12.2 $ 6.6 $(18.8)(1) $ --
Accounts receivable, net........................ 117.2 19.0 -- 136.2
Inventories..................................... 66.1 5.0 71.1
Other current assets............................ 8.4 1.8 -- 10.2
------ ----- ------ ------
Total current assets............................ 203.9 32.4 (18.8) 217.5
Property and equipment, net..................... 136.5 6.1 10.0(2) 152.6
Goodwill and other intangibles, net............. 210.7 -- 61.1(3) 271.8
Investments in joint ventures................... 7.7 2.6 10.3
Other assets.................................... 1.0 -- -- 1.0
------ ----- ------ ------
TOTAL ASSETS.................................... $559.8 $41.1 $ 52.3 $653.2
====== ===== ====== ======
Operating lines of credit....................... $ -- $ -- $ -- $ --
Accounts payable................................ 63.2 4.9 0.3(4) 68.4
Accrued liabilities............................. 16.0 2.9 -- 18.9
Current portion of debt......................... 12.5 0.4 12.9
------ ----- ------ ------
Total current liabilities....................... 91.7 8.2 0.3 100.2
Long-term portion of debt....................... 192.9 1.2 65.2(5) 259.3
Deferred taxes.................................. 13.4 -- 13.4
Other liabilities............................... 2.1 -- -- 2.1
------ ----- ------ ------
TOTAL LIABILITIES............................... 300.1 9.4 65.5 375.0
Convertible preferred stock, Series A........... 12.1 -- -- 12.1
Convertible preferred stock, Series B........... 18.8 -- -- 18.8
Common stock, warrants and additional
paid-in-capital............................... 257.8 2.7 15.8(6) 276.3
Retained earnings (accumulated deficit)......... (29.0) 29.0 (29.0)(7) (29.0)
------ ----- ------ ------
TOTAL STOCKHOLDERS' EQUITY...................... 259.7 31.7 (13.2) 278.2
------ ----- ------ ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY...... $559.8 $41.1 $ 52.3 $653.2
====== ===== ====== ======
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
45
<PAGE> 59
METAL MANAGEMENT, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN MILLIONS)
The unaudited pro forma condensed consolidated balance sheet at June 30,
1998 reflects the Pro Forma Balance Sheet Transactions as if these transactions
had occurred on June 30, 1998.
The purchase consideration for Naporano is comprised of the following:
<TABLE>
<S> <C>
Shares of MTLM restricted Common Stock issued............... 1,938,879
Cash payment................................................ $ 84.0
Value of restricted Common Stock issued..................... 18.5
Cash payment for acquisition costs.......................... 1.3
----------
Total estimated purchase consideration...................... $ 103.8
==========
</TABLE>
The estimated purchase consideration for Naporano is allocated for pro
forma purposes as follows:
<TABLE>
<S> <C>
Current assets.............................................. $ 32.4
Noncurrent assets........................................... 18.7
Current liabilities......................................... (8.2)
Long term debt/other liabilities............................ (1.2)
Goodwill.................................................... 62.1
----------
$ 103.8
==========
</TABLE>
The above allocation of the estimated purchase consideration is preliminary
and may change upon final determination of the fair value of assets acquired and
liabilities assumed. Goodwill is being amortized over 40 years.
(1) Reflects the following:
<TABLE>
<S> <C>
Total sources:
Borrowings under the Senior Credit Facility.......... $ 65.2
Total uses:
Cash consideration paid to the former shareholders of
Naporano in partial consideration for all the common
stock of Naporano................................... (84.0)
----------
$ (18.8)
==========
</TABLE>
(2) Reflects the write-up of fixed assets purchased from Naporano to estimated
fair market value.
(3) Reflects goodwill, net of transaction costs of $1.0 million already
capitalized, related to the acquisition of Naporano.
(4) Reflects estimated remaining transaction costs to be incurred related to the
acquisition of Naporano.
(5) Reflects borrowings under the Senior Credit Facility to fund partial cash
consideration for the acquisition of Naporano.
46
<PAGE> 60
METAL MANAGEMENT, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN MILLIONS)
(6) Reflects the following:
<TABLE>
<S> <C>
Issuance of 1,938,878 shares of restricted Common Stock
to the shareholders of Naporano in partial
consideration for all the common stock of Naporano.... $ 18.5
The elimination of historical common stock and
additional paid in capital of Naporano................ (2.7)
----------
$ 15.8
==========
</TABLE>
(7) Reflects the elimination of historical retained earnings of Naporano.
47
<PAGE> 61
METAL MANAGEMENT, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
PRO FORMA
OPERATING
STATEMENT
ACQUISITIONS PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------ ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales................................... $214.9 $40.2(1) $ --(9) $255.1
Cost of sales............................... 195.2 37.1(2) --(10) 232.3
------ ----- ------ ------
Gross profit................................ 19.7 3.1 -- 22.8
General and administrative expenses......... 11.5 1.4(3) -- 12.9
Depreciation and amortization............... 4.4 0.5(4) 0.3(11) 5.2
Non-recurring expenses...................... 0.9 2.8 -- 3.7
------ ----- ------ ------
Operating profit (loss) from continuing
operations................................ 2.9 (1.6) (0.3) 1.0
Income (loss) from joint ventures........... (0.2) --(5) -- (0.2)
Other income (expense), net................. 0.6 (0.4)(6) -- 0.2
------ ----- ------ ------
Income (loss) from continuing operations
before interest expense and income
taxes..................................... 3.3 (2.0) (0.3) 1.0
Interest expense............................ 4.9 0.1(7) 1.8(12) 6.8
------ ----- ------ ------
Income (loss) from continuing operations
before income taxes....................... (1.6) (2.1) (2.1) (5.8)
Provision (benefit) for income taxes........ (0.4) --(8) (1.5)(13) (1.9)
------ ----- ------ ------
Net income (loss) from continuing
operations................................ (1.2) (2.1) (0.6) (3.9)
Preferred stock dividends................... 0.4 -- -- 0.4
------ ----- ------ ------
Net income (loss) from continuing operations
applicable to Common Stock................ $ (1.6) $(2.1) $ (0.6) $ (4.3)
====== ===== ====== ======
Weighted average shares outstanding......... 34.3 n/a 2.9(14) 37.2
Basic loss from continuing operations
applicable to Common Stock................ $(0.05) n/a $(0.21) $(0.12)
====== ===== ====== ======
Diluted loss from continuing operations
applicable to Common Stock................ $(0.05) n/a $(0.21) $(0.12)
====== ===== ====== ======
OTHER FINANCIAL DATA:
Adjusted EBITDA(15)......................... $ 8.0 $ 1.7 $ -- $ 9.7
====== =====
Adjustments................................. -- --
====== ======
Pro Forma Adjusted EBITDA................... $ -- $ 9.7
====== ======
</TABLE>
See notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations
48
<PAGE> 62
METAL MANAGEMENT, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
PRO FORMA
OPERATING
STATEMENT
ACQUISITIONS PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------ ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales.............................. $570.0 $450.0(1) $ -- $ 1,020.0
Cost of sales.......................... 517.9 405.9(2) 0.3(9) 924.1
------ ------ ------ ---------
Gross profit........................... 52.1 44.1 (0.3) 95.9
General and administrative expenses.... 28.2 25.7(3) (1.2)(10) 52.7
Depreciation and amortization.......... 10.3 4.9(4) 2.7(11) 17.9
Non-recurring expenses................. 33.7 -- -- 33.7
------ ------ ------ ---------
Operating profit (loss) from continuing
operations........................... (20.1) 13.5 (1.8) (8.4)
Income (loss) from joint ventures...... 0.4 (0.5)(5) -- (0.1)
Other income, net...................... 0.4 1.6(6) -- 2.0
------ ------ ------ ---------
Income (loss) from continuing
operations before interest expense
and income taxes..................... (19.3) 14.6 (1.8) (6.5)
Interest expense....................... 10.0 4.1(7) 12.8(12) 26.9
------ ------ ------ ---------
Income (loss) from continuing
operations before income taxes....... (29.3) 10.5 (14.6) (33.4)
Provision (benefit) for income taxes... (0.5) 1.7(8) (3.0)(13) (1.8)
------ ------ ------ ---------
Net income (loss) from continuing
operations........................... (28.8) 8.8 (11.6) (31.6)
Preferred stock dividends.............. 7.1 -- -- 7.1
------ ------ ------ ---------
Net income (loss) from continuing
operations applicable to Common
Stock................................ $(35.9) $ 8.8 $(11.6) $ (38.7)
====== ====== ====== =========
Weighted average shares outstanding.... 20.8 n/a 16.4(14) 37.2
Basic loss from continuing operations
applicable to Common Stock........... $(1.73) n/a $(0.71) $ (1.04)
====== ====== ====== =========
Diluted loss from continuing operations
applicable to Common Stock........... $(1.73) n/a $(0.71) $ (1.04)
====== ====== ====== =========
OTHER FINANCIAL DATA:
Adjusted EBITDA (15)................... $ 24.3 $ 17.9 $ -- $ 42.2
====== ======
Adjustments............................ 0.9 0.9
------ ---------
Pro Forma Adjusted EBITDA.............. $ 0.9 $ 43.1
====== =========
</TABLE>
See notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations
49
<PAGE> 63
METAL MANAGEMENT, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS)
The unaudited pro forma condensed consolidated statements of operations for
the three months ended June 30, 1998 and for the fiscal year ended March 31,
1998 reflects the Offering, the application of the net proceeds therefrom,
borrowings under the Senior Credit Facility, and the application of net proceeds
therefrom, the Pro Forma Operating Statement Acquisitions and certain other
transactions described below as if such transactions had occurred on April 1,
1997.
The unaudited Historical and Pro Forma Operating Statement Acquisitions
historical information for each period includes historical information of the
Pro Forma Operating Statement Acquisitions through each respective acquisition
date (see introduction to "Pro Forma Financial Data") as follows:
<TABLE>
<CAPTION>
THREE FISCAL
MONTHS YEAR
ENDED ENDED
JUNE 30, MARCH 31,
1998 1998
-------- ---------
<S> <C> <C>
(1) Reflects the historical net sales for:
Reserve Iron & Metal.............................. $ -- $ 9.3
Isaac Group....................................... -- 46.0
Proler Southwest.................................. -- 13.5
Cozzi Iron & Metal................................ -- 173.8
Aerospace......................................... -- 44.4
Naporano.......................................... 40.2 163.0
----- ------
$40.2 $450.0
===== ======
(2) Reflects the historical cost of sales for:
Reserve Iron & Metal.............................. $ -- $ 8.5
Isaac Group....................................... -- 44.6
Proler Southwest.................................. -- 11.1
Cozzi Iron & Metal................................ -- 162.1
Aerospace......................................... -- 38.7
Naporano.......................................... 37.1 140.9
----- ------
$37.1 $405.9
===== ======
(3) Reflects the historical general and administrative
expenses for:
Reserve Iron & Metal.............................. $ -- $ 0.5
Isaac Group....................................... -- 3.4
Proler Southwest.................................. -- 1.9
Cozzi Iron & Metal................................ -- 5.9
Aerospace......................................... -- 3.1
Naporano.......................................... 1.4 10.9
----- ------
$ 1.4 $ 25.7
===== ======
</TABLE>
50
<PAGE> 64
METAL MANAGEMENT, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS--(CONTINUED)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE FISCAL
MONTHS YEAR
ENDED ENDED
JUNE 30, MARCH 31,
1998 1998
-------- ---------
<S> <C> <C>
(4) Reflects the historical depreciation and amortization
expense for:
Reserve Iron & Metal.............................. $ -- $ 0.2
Isaac Group....................................... -- 0.4
Proler Southwest.................................. -- 0.1
Cozzi Iron & Metal................................ -- 1.8
Aerospace......................................... -- 0.5
Naporano.......................................... 0.5 1.9
----- ------
$ 0.5 $ 4.9
===== ======
(5) Reflects the historical income (loss) from joint
ventures for:
Cozzi Iron & Metal................................ $ -- $ (0.7)
Naporano.......................................... -- 0.2
----- ------
$ -- $ (0.5)
===== ======
(6) Reflects the historical other income (expense) for:
Proler Southwest.................................. $ -- $ 0.1
Cozzi Iron & Metal................................ -- 0.5
Aerospace......................................... -- 0.2
Naporano.......................................... (0.4) 0.8
----- ------
$(0.4) $ 1.6
===== ======
(7) Reflects the historical interest expense for:
Reserve Iron & Metal.............................. $ -- $ 0.2
Isaac Group....................................... -- 0.7
Proler Southwest.................................. -- 0.1
Cozzi Iron & Metal................................ -- 2.8
Aerospace......................................... -- 0.1
Naporano.......................................... 0.1 0.2
----- ------
$ 0.1 $ 4.1
===== ======
(8) Reflects the historical income tax expense for:
Proler Southwest.................................. $ -- $ 0.2
Cozzi Iron & Metal................................ -- 0.5
Aerospace......................................... -- 0.9
Naporano.......................................... -- 0.1
----- ------
$ -- $ 1.7
===== ======
</TABLE>
The following reflects pro forma adjustments to the Company's condensed
consolidated statements of operations giving effect to the Offering and
borrowings under the Senior Credit Facility, the application of net proceeds
therefrom, the Pro Forma Operating Statement Acquisitions and certain other
equity transactions described below as if such transactions had occurred on
April 1, 1997.
51
<PAGE> 65
METAL MANAGEMENT, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS--(CONTINUED)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE FISCAL
MONTHS YEAR
ENDED ENDED
JUNE 30, MARCH 31,
1998 1998
-------- ---------
<S> <C> <C>
(9) Reflects the following:
Adjustment of the Isaac Group's LIFO cost of sales
to a FIFO basis to conform to the Company policy
for inventory valuation......................... $ -- $ (0.2)
Adjustment of Aerospace's LIFO cost of sales to a
FIFO basis to conform to the Company policy for
inventory valuation............................. -- 0.3
Adjustment to reflect lease expense on Aerospace's
real property which the Company is leasing under
a 10 year lease agreement....................... -- 0.2
------ ------
$ -- $ 0.3
====== ======
(10) Reflects the contractual reduction in compensation
expense for the former
shareholders of the Pro Forma Operating Statement
Acquisitions who have signed new employment
agreements with the Company:
Isaac Group....................................... $ -- $ (0.2)
Proler Southwest.................................. -- (0.3)
Aerospace......................................... -- (0.7)
------ ------
$ -- $ (1.2)
====== ======
(11) Reflects the following adjustments to conform
depreciation policies to the
Company's policy and record additional
depreciation expense on the fair value of fixed
assets acquired:
Adjustment to eliminate accelerated depreciation
expense recognized by the following:
Reserve Iron & Metal.............................. $ -- $ (0.2)
Isaac Group....................................... -- (0.4)
Cozzi Iron & Metal................................ -- (1.9)
Naporano.......................................... (0.5) (1.8)
------ ------
Subtotal.......................................... $ (0.5) $ (4.3)
------ ------
Adjustment to record depreciation expense based on
the straight-line method based on the fair market
value of fixed assets, using an average useful life
of 30 years for buildings and improvements and 7 to
19 years for machinery and equipment, for the
following:
Reserve Iron & Metal.............................. $ -- $ 0.1
Isaac Group....................................... -- 0.4
Cozzi Iron & Metal................................ -- 1.3
Naporano.......................................... 0.4 1.7
------ ------
Subtotal.......................................... $ 0.4 $ 3.5
------ ------
</TABLE>
52
<PAGE> 66
METAL MANAGEMENT, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS--(CONTINUED)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE FISCAL
MONTHS YEAR
ENDED ENDED
JUNE 30, MARCH 31,
1998 1998
-------- ---------
<S> <C> <C>
Adjustment to record incremental depreciation expense
for those companies already using the straight-line
depreciation method based on the fair market value
of fixed assets, using an average useful life of 30
years for buildings and improvements and 7 to 19
years for machinery and equipment, for the
following:
Proler Southwest.................................. $ -- $ 0.2
Aerospace......................................... -- 0.2
------ ------
Subtotal.......................................... $ -- $ 0.4
------ ------
Adjustment to eliminate depreciation expense on the
Aerospace real estate which was not acquired by the
Company:
Subtotal.......................................... $ -- $ (0.1)
------ ------
Adjustment to eliminate goodwill amortization on
intangible assets of Cozzi Iron & Metal which were
not acquired by the Company:
Subtotal.......................................... $ -- $ (0.1)
------ ------
Adjustment to record goodwill and intangible
amortization associated with the acquisitions of the
following:
Isaac Group....................................... $ -- 0.4
Proler Southwest.................................. -- 0.3
Cozzi Iron & Metal................................ -- 1.1
Aerospace......................................... -- 0.1
Naporano.......................................... 0.4 1.4
------ ------
Subtotal.......................................... $ 0.4 $ 3.3
------ ------
TOTAL............................................. $ 0.3 $ 2.7
====== ======
(12) Reflects the following:
Adjustment to record amortization of debt issuance
costs of $6.4 million over the 10 year life of the
Notes............................................... $ 0.2 $ 0.6
Adjustment to record amortization of deferred
financing costs of $3.7 million, related to the
Senior Credit Facility, over the 3 year term of the
Senior Credit Facility.............................. 0.3 1.2
Adjustment to eliminate historical interest
expense............................................. (5.0) (14.1)
Adjustment to record interest expense on the $180
million of Notes at an annual interest rate of
10.0%............................................... 4.5 18.0
Adjustment to record interest expense on $21.6
million of notes payable to the former shareholders
of the Isaac Group at an annual interest rate of
8.5%................................................ 0.5 1.8
Adjustment to record interest expense on borrowings
on the Senior Credit Facility at a weighted average
annual interest rate of 8.0%........................ 1.3 5.3
------ ------
TOTAL............................................. $ 1.8 $ 12.8
====== ======
(13) Adjustment to record income taxes on Reserve Iron &
Metal, the Isaac Group, Naporano and the tax effects
of deductible pro forma adjustments at an estimated
statutory rate of 40.95%............................ $ (1.5) $ (3.0)
====== ======
</TABLE>
53
<PAGE> 67
METAL MANAGEMENT, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS--(CONTINUED)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE FISCAL
MONTHS YEAR
ENDED ENDED
JUNE 30, MARCH 31,
1998 1998
-------- ---------
<S> <C> <C>
(14) Reflects the following:
Adjustment to weighted average shares outstanding to
reflect incremental shares issued with each
respective acquisition and other issuances of Common
Stock
Isaac Group....................................... -- 0.4
Proler Southwest.................................. -- 0.7
Cozzi Iron & Metal................................ -- 7.7
Aerospace......................................... -- 0.3
Naporano.......................................... 1.9 1.9
Other issuances of Common Stock................... 1.0 4.1
------ ------
Subtotal.......................................... 2.9 15.1
------ ------
In April and May 1997, the Company completed a
private offering of 2,025,000 shares of Common Stock
at $7.25 per share. Adjustment to reflect the
incremental shares issued:
Subtotal.......................................... -- 0.2
------ ------
On December 18, 1997, the Company completed a private
offering of 1,470,588 shares of Common Stock to
Samstock, L.L.C. Adjustment to reflect the
incremental shares issued:
Subtotal.......................................... -- 1.1
------ ------
TOTAL............................................. 2.9 16.4
====== ======
(15) Adjusted EBITDA represents net income from continuing operations plus interest
expense (including amortization of debt issuance costs), taxes, depreciation and
amortization. Adjusted EBITDA also excludes historical non-recurring expenses
and other non-operating income and expenses. Adjusted EBITDA is presented here
to provide additional information about the Company's ability to meet its future
debt service, capital expenditure and working capital requirements. Adjusted
EBITDA is not a measure of financial performance under GAAP and should not be
considered as an alternative either to net income as an indicator of the
Company's operating performance, or to cash flows as a measure of the Company's
liquidity. Items excluded from Adjusted EBITDA, such as non-recurring expenses,
depreciation and amortization, are significant components of the Company's
financial statements and should be considered in assessing the financial
performance of the Company. Adjusted EBITDA as defined in this Prospectus may
differ from similarly titled measures presented by other companies.
</TABLE>
54
<PAGE> 68
THE COMPANY
Metal Management is one of the largest and fastest-growing full service
metals recyclers in the United States, with 59 recycling facilities in 14
states. The Company is a leading consolidator in the metals recycling industry
and has achieved this position primarily through the implementation of its
national strategy of completing and integrating regional acquisitions. The
Company believes that its consolidation strategy will enhance the competitive
position and profitability of the operations that it acquires through improved
managerial and financial resources and increased economies of scale.
Metal Management is primarily engaged in the collection and processing of
ferrous and non-ferrous metals for resale to metals brokers, steel producers,
and producers and processors of other metals. The Company collects industrial
scrap and obsolete scrap, processes it into reusable forms, and supplies the
recycled metals to its customers, including mini-mills, integrated steel mills,
foundries and metals brokers. The Company believes that it provides one of the
most comprehensive offerings of both ferrous and non-ferrous scrap metals in the
industry. The Company's ferrous products primarily include shredded, sheared,
hot briquetted, cold briquetted and bundled scrap and broken furnace iron. The
Company also processes non-ferrous metals, including aluminum, copper, stainless
steel, brass, titanium and high-temperature alloys, using similar techniques and
through application of the Company's proprietary technologies. For the year
ended March 31, 1998, the Company sold or brokered approximately 3.1 million
tons of ferrous scrap and approximately 400.2 million pounds of non-ferrous
scrap.
The Company's predecessor was incorporated on September 24, 1981 as a
California corporation under the name General Parametrics Corporation, and was
re-incorporated as a Delaware corporation in June 1986 under the same name.
Prior to April 1996, the Company manufactured and marketed color thermal and dye
sublimation printers and related consumables, including ribbons, transparencies
and paper. The Company sold this business in two separate transactions in July
and December of 1996 for $1.3 million in cash and future royalty streams which
the Company does not anticipate will result in material payments to the Company.
On April 12, 1996, the Company changed its name to "Metal Management, Inc."
The Common Stock is traded on NASDAQ under the trading symbol "MTLM". The
Company's principal executive offices are located at 500 North Dearborn Street,
Suite 405, Chicago, Illinois 60610, and its telephone number is (312) 645-0700.
55
<PAGE> 69
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ACQUISITION OF THE ISAAC GROUP, PROLER SOUTHWEST, COZZI IRON & METAL AND
NAPORANO
George A. Isaac III, a Director and Executive Vice President of the
Company, is the former principal stockholder of the companies of the Isaac
Group, which the Company acquired on June 23, 1997. In exchange for all of the
outstanding stock of the Isaac Group, the Company paid $36.5 million in cash,
and issued an aggregate of 1,942,857 shares of Common Stock and warrants to
purchase an aggregate of 462,500 shares of Common Stock at exercise prices
ranging from $10.80 to $11.70 per share. The Common Stock and warrants were
valued at $24.1 million for financial reporting purposes. The purchase price was
negotiated at arms-length by the Company with the stockholders of the Isaac
Group. In addition, the Company issued Mr. Isaac warrants to purchase 287,500
shares of Common Stock at an exercise price of $11.70 per share in consideration
for entering into a non-compete agreement with the Company, and warrants to
purchase 76,923 shares of Common Stock at an exercise price of $13.00 per share
in consideration for services rendered or to be rendered to the Company. The
warrants were valued at $1.8 million for financial reporting purposes.
William T. Proler, a Director of the Company, is the former principal
stockholder of Proler Southwest, which the Company acquired on August 28, 1997.
In exchange for all of the outstanding stock of Proler Southwest, the Company
paid $18.0 million in cash, and issued an aggregate of 1,750,000 shares of
Common Stock and warrants to purchase an aggregate of 375,000 shares of Common
Stock at an exercise price of $6.00 per share. The Common Stock and warrants
were valued at $12.7 million for financial reporting purposes. The purchase
price was negotiated at arms-length by the Company with the stockholders of
Proler Southwest.
Albert A. Cozzi, a Director, President and Chief Operating Officer of the
Company, Frank J. Cozzi, a Director and Vice President of the Company, and
Gregory P. Cozzi, a Director of the Company, are the former principal
stockholders of Cozzi Iron & Metal, which the Company acquired on December 1,
1997. In exchange for all of the outstanding stock of Cozzi Iron & Metal, the
Company paid $6.0 million in cash, and issued an aggregate of 11,499,986 shares
of Common Stock, warrants to purchase an aggregate of 750,001 shares of Common
Stock at an exercise price of $5.91 per share and warrants to purchase 750,001
shares of Common Stock at an exercise price of $15.84 per share. The Common
Stock and warrants were valued at $73.4 million for financial reporting
purposes. The purchase price was negotiated at arms-length by the Company with
the stockholders of Cozzi Iron & Metal.
Joseph F. Naporano, a Director of the Company, is a former principal
stockholder of Naporano, which the Company acquired on July 1, 1998. In exchange
for all of the outstanding stock of Naporano, the Company paid approximately
$85.5 million in cash, and issued an aggregate of 1,938,879 shares of Common
Stock. The Common Stock was valued at $18.5 million for financial reporting
purposes. The purchase price was negotiated at arms-length by the Company with
the stockholders of Naporano.
STOCKHOLDERS AGREEMENTS
The Cozzi Shareholders, the MTLM Shareholders and Samstock (collectively,
the "Shareholders") together owned approximately 36.4% of the Company's issued
and outstanding Common Stock as of August 31, 1998 (without giving effect to the
issuance of Common Stock issuable upon exercise of warrants and options granted
by the Company).
Under the Stockholders Agreement, the Shareholders have agreed that the
Cozzi Shareholders and the MTLM Shareholders will each have the right to
nominate: (i) at any time the total number of directors is an even number,
one-half of the total number of directors slated for election, or (ii) at any
time the total number of directors is an odd number, one-half of the next lowest
even number of directors slated for election, provided in any case that each
group must nominate one individual, independent and unaffiliated from the
Shareholders or the Company. The Stockholders Agreement also provides that, so
long as the Purchaser Condition is satisfied, Samstock has the right to
designate either Sam Zell or Rod F. Dammeyer as a nominee for director, and has
so nominated Rod F. Dammeyer. The Purchaser Condition is satisfied if both: (i)
the date is prior to December 19, 2000, and (ii) Samstock and its Permitted
Transferees (as such term is defined in the Stockholders Agreement) have not
sold or transferred more than one-third of their shares (including
56
<PAGE> 70
shares issuable upon the exercise of warrants). The Stockholders Agreement
further requires each Shareholder to vote for the other parties' nominees for
election to the Board of Directors.
The parties to the Stockholders Agreement also have agreed to vote for
proposals, if and when presented by the Company, to amend the Company's
organizational documents to require the approval of at least two-thirds of the
Board of Directors to, among other things: (i) amend the Company's certificate
of incorporation or bylaws; (ii) liquidate or merge the Company; (iii) sell
substantially all of the Company's assets; (iv) elect or remove officers; (v)
adopt an annual budget; (vi) borrow funds, sell assets or make capital
expenditures exceeding $5 million; (vii) issue or register the Company's
securities; (viii) declare or pay any dividends or distributions; (ix) change
the compensation of or modify or terminate any written agreement with any of the
Cozzi Shareholders or the MTLM Shareholders; or (x) create or change any
committee of the Board of Directors. No such proposals have, to date, been
presented by the Company and, therefore, no such proposals have been enacted.
Accordingly, no such two-thirds voting requirement exists in the Company's
organizational documents.
Under the Stockholders Agreement, the Cozzi Shareholders and the MTLM
Shareholders are prohibited from transferring or disposing of their shares, or
any interest therein, for the term of the agreement except in accordance with
the terms of the Stockholders Agreement. Samstock is prohibited from
transferring or disposing of its shares, or any interest therein, for a period
of one year except in accordance with the terms of the Stockholders Agreement.
If any of the Cozzi Shareholders or the MTLM Shareholders desire to sell their
respective shares of Common Stock, the selling shareholder must generally offer
its shares to members of its own shareholder group, members of the other
shareholder group (excluding Samstock), and the Company, in that order, before
selling to a third party. Also, if either group receives an offer to buy its
shares from a third party, it generally must offer the other Shareholders
(including Samstock) the right to participate in the offer on the same terms and
conditions.
In connection with the Company's acquisition of Proler Southwest, the
former equity owners of Proler Southwest Inc. (the "Proler Shareholders") have
entered into a two-year stockholders agreement with T. Benjamin Jennings, dated
August 27, 1997, pursuant to which the parties agree to vote their shares of
Common Stock in favor of William T. Proler (or, if he is unable to serve,
another individual chosen by the Proler Shareholders) as a Director of the
Company.
DESIGNATION OF JOSEPH F. NAPORANO AS A NOMINEE FOR DIRECTOR
Pursuant to the Stock Purchase Agreement, dated May 24, 1998 (the "Stock
Purchase Agreement"), among the Company, Andrew J. Naporano, Jr. and Joseph F.
Naporano (the "Naporano Shareholders"), and subject to the approval of the
Company's stockholders, the Company agreed to nominate Joseph F. Naporano or
Andrew J. Naporano, Jr. for election to the Board of Directors, and has so
nominated Joseph F. Naporano, until the earlier of: (i) July 1, 2001; and (ii)
the date upon which the Naporano Shareholders collectively own less than 50% of
the Common Stock issued to them pursuant to the terms of the Stock Purchase
Agreement.
RESIGNATION OF GEORGE O. MOOREHEAD
On December 1, 1997, the Company and George O. Moorehead, a former Director
and Executive Vice President of the Company, entered into two agreements, a
Separation Agreement and a Stock Warrant Settlement Agreement, resolving all
outstanding issues between the Company and Mr. Moorehead. Pursuant to the
Separation Agreement: (i) Mr. Moorehead resigned as an officer and employee of
the Company and EMCO Recycling, and as a director of EMCO Recycling, effective
December 1, 1997; (ii) Mr. Moorehead delivered to the Company a Non-Compete,
Non-Solicitation and Confidentiality Covenant and Agreement; and (iii) the
Company (a) paid Mr. Moorehead $250,000 on December 1, 1997, (b) agreed to
provide Mr. Moorehead certain insurance and other benefits for a period of five
years, (c) paid certain legal fees to Mr. Moorehead's counsel, and (d) agreed to
permit Mr. Moorehead to exercise certain warrants to acquire Common Stock
previously granted to him on a "net cashless" basis, subject to the Company's
right to refuse "net cashless" exercises under certain circumstances. Pursuant
to the Stock Warrant Settlement Agreement, the Company issued Mr. Moorehead
warrants to purchase 200,000 shares of Common Stock at an exercise
57
<PAGE> 71
price of $12.00 per share, exercisable until December 1, 2002, and paid Mr.
Moorehead approximately $665,000.
ISAAC GROUP NOTES
In connections with the Company's acquisition of the Isaac Group on June
23, 1997, the Company incurred $45.0 million of indebtedness to former Isaac
Group shareholders, of which $21.6 million remains outstanding (the "Isaac
Notes"). The Isaac Notes bear interest at a floating rate per annum equal to
Bankers Trust Company's prime rate as in effect from time to time, payable
quarterly. As of the date of this Proxy Statement, Bankers Trust Company's prime
rate is 8.25%. The Isaac Notes mature in two equal installments on February 15,
1999 and February 15, 2000. The Isaac Notes are secured by a letter of credit
that is provided under the Company's credit facility and is applied against the
Company's availability thereunder.
LOANS TO GERARD M. JACOBS AND T. BENJAMIN JENNINGS
On July 22, 1998, Gerard M. Jacobs, a Director and Chief Executive Officer
of the Company, and T. Benjamin Jennings, a Director, Chairman of the Board and
Chief Development Officer of the Company, each executed a Secured Promissory
Note ("Promissory Note") in favor of the Company, pursuant to which the Company
loaned each of them $500,000. Each Promissory Note is due on July 22, 1999 and
bears interest at 10% per annum. In addition, Messrs. Jacobs and Jennings each
executed a Pledge Agreement, dated July 22, 1998 ("Pledge Agreement"), whereby
Messrs. Jacobs and Jennings pledged options to purchase 200,000 shares of Common
Stock at an exercise price of $4.00 as security for their respective Promissory
Notes.
OTHER RELATED PARTY TRANSACTIONS
From December 1997 to March 1998, Xavier Hermosillo, an officer of the
Company, provided investor relations services for the Company through his firm,
Xavier Hermosillo & Associates. Under an agreement with Mr. Hermosillo's firm,
the Company paid up to $4,000 per month for these services. The Company paid
fees of $36,000 for the year ended March 31, 1998 for these services. On
December 1, 1997, Mr. Hermosillo became an employee of the Company. As a
finder's fee in connection with the Company's acquisition of Superior Forge,
Inc., the Company issued to Xavier Hermosillo warrants to purchase 20,000 shares
of Common Stock at an exercise price of $15.00 per share, exercisable for three
years from the date of issuance, and also made a cash payment to him of $25,000.
On April 11, 1996, the Company and Harold Rubenstein, a former Director of
the Company and one of the Company's largest shareholders, entered into a
five-year consulting agreement. Under this Agreement, Mr. Rubenstein provides
the Company with consulting and management assistance with respect to
operations, strategic planning and other aspects of the Company's business. Fees
paid for these services amounted to $84,000 for each of the years ended March
31, 1997 and 1998.
The Company issued a promissory note, due April 11, 1999, bearing interest
at 9% per annum and a balance outstanding as of March 31, 1998 of approximately
$547,000, to H&S Broadway, an entity principally owned by Harold Rubenstein. The
Company has also issued a promissory note, due April 11, 1999, bearing interest
at 9% per annum, with a balance outstanding as of March 31, 1998 of
approximately $403,000, to Harold Rubenstein. During the year ended March 31,
1998, the Company paid $85,501 in interest to H&S Broadway and Harold
Rubenstein. On May 14, 1998, the Company repaid both obligations.
On March 13, 1998, the Company purchased substantially all of the assets of
Ellis Metals, Inc. ("Ellis Metals"), which was principally owned by Harold
Rubenstein. Prior to the acquisition date, the Company had entered into various
transactions with Ellis Metals, including a five-year exclusive supply
agreement, whereby Ellis Metals sold all of its inventory to EMCO Recycling or
to EMCO Recycling's customers through a direct shipment arrangement. In the
latter arrangement, EMCO Recycling received a brokerage fee. In consideration
for entering into the agreement, Ellis Metals received a fee of $2,500 per
month. The Company paid Ellis Metals $30,000 and $27,500 under the terms of the
agreement for the years ended March 31, 1997 and March 31, 1998, respectively.
Inventory purchases from Ellis Metals were $3.9 million for the year ended
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<PAGE> 72
March 31, 1997 and $2.7 million for the year ended March 31, 1998. The Company
had sales to Ellis Metals of $0.3 million for the year ended March 31, 1997 and
sales that were insignificant for the year ended March 31, 1998. The Company
also advanced $300,000 to Ellis Metals under an unsecured promissory note, due
April 12, 2001, bearing an interest rate of 9% per annum. This note was
discharged in connection with the Company's acquisition of the assets of Ellis
Metals.
The Company has also entered into various transactions with Empire, which
is principally owned by Harold Rubenstein. The Company purchases inventory from
Empire, from time to time, at prices equivalent to market value. Inventory
purchases from Empire were insignificant for the year ended March 31, 1998 and
$0.3 million for the year ended March 31, 1997.
The Company also leased certain land to Ellis Metals. The Company received
$85,500 and $78,000 in rent payments from Ellis Metals for the years ended March
31, 1998 and March 31, 1997, respectively.
To facilitate a loan to the Company from a commercial bank, on January 7,
1997, Gerard M. Jacobs, T. Benjamin Jennings, Donald F. Moorehead, George O.
Moorehead, Harold Rubenstein and Raymond F. Zack, each of whom is or was a
Director at the time of issuance, provided personal guaranties to the bank. In
consideration of the guaranties, the Company issued warrants to these
individuals (the "Guaranty Warrants") to purchase an aggregate of 500,000 shares
of Common Stock at $4.00 per share (subject to certain restrictions). The
Guaranty Warrants expire on or about January 7, 2002.
The Isaac Group leases certain property from a company in which George A.
Isaac III, a Director and Executive Vice President of the Company, is a
shareholder. The property is subject to a lease which commenced with the
acquisition of the Isaac Group on June 23, 1997. The annual base rent for the
property is approximately $317,000.
HouTex, a wholly owned subsidiary of the Company, leases a 45-acre
processing facility located in Houston, Texas from a limited partnership
affiliated with Mike Melnik, a former Director of the Company for an annual rent
of $228,000.
Cozzi Iron & Metal utilizes certain printing services of Minute Man
Printing, a company in which Frank J. Cozzi, a Director and Vice President of
the Company, has a 50% ownership interest. Cozzi Iron & Metal paid Minute Man
Printing $77,990 for these services during the period December 1, 1997 through
March 31, 1998.
LEGAL PROCEEDINGS
From time to time, the Company is involved in various litigation matters
involving ordinary and routine claims incidental to the Company's business.
There are presently no legal proceedings pending against the Company which, in
the opinion of management, would have a material adverse effect on the Company's
business, financial position or results of operations; however, there can be no
assurance such claims will not result in a material adverse effect.
On July 24, 1998, the City of Chicago served Cozzi Iron & Metal with a
lawsuit that alleges violations of various municipal ordinance provisions
relating to facility operations and waste handling. (City of Chicago v. Cozzi
Iron & Metal, Inc., 98CH9810). Cozzi Iron & Metal is negotiating with the City
to reach an appropriate resolution of this matter. At this time, Cozzi Iron &
Metal cannot estimate the costs, if any, that may result from this lawsuit.
Based on its analysis of the situation, the management of the Company does not
believe such costs would have a material adverse effect on the Company's
business or financial condition; however, there can be no assurance that this
will be the case.
On August 25, 1998, a federal grand jury indicted Newell Recycling of
Denver, Inc. (now Newell Recycling West) in connection with an allegation Newell
Recycling of Denver, Inc. knowingly endangered employees by illegally storing
and disposing gasoline in violation of the Resource Conversation and Recovery
Act. Two former employees and one current employee of Newell Recycling West were
charged with illegal storage and disposal of hazardous waste. The allegations
relate to a fire that occurred at Newell Recycling West's Denver facility on
October 30, 1995, before Newell Recycling West was purchased by the Company. The
Company has received an indemnity from the previous owner for all costs and
expenses related to the fire.
59
<PAGE> 73
However, there can be no assurance that the pending proceeding will not
materially adversely affect the Company.
By letter dated September 22, 1998, the Indiana Department of Environmental
Management issued Cozzi Iron & Metal a notice of violation that alleges
noncompliance with provisions primarily related to stormwater management at
Cozzi Iron & Metal's East Chicago, Indiana facility. The notice of violation
requests that certain actions be taken and that Cozzi Iron & Metal agree to the
entry of an order imposing a $252,500 penalty. The notice of violation relates
in part to a July 4, 1998 fire at the facility. Cozzi Iron & Metal will attempt
to negotiate to reach an appropriate resolution of this matter. At this time,
Cozzi Iron & Metal cannot estimate the costs, if any, that may result from this
notice of violation. Based on its analysis of the situation, the management of
the Company does not believe such costs would have a material adverse effect on
the Company's business or financial condition; however, there can be no
assurance that this will be the case.
60
<PAGE> 74
DESCRIPTION OF THE SENIOR CREDIT FACILITY
On March 31, 1998, the Company and its subsidiaries entered into a credit
facility (the "Senior Credit Facility") with BT Commercial Corporation, as agent
for the lenders (the "Agent"), and certain commercial lending institutions. The
Senior Credit Facility originally provided for a revolving credit and letter of
credit facility of up to $200 million, subject to a borrowing base limitation as
described below. On June 19, 1998, the Senior Credit Facility was amended to
increase the maximum amount available under the facility to $250 million,
subject to the borrowing base limitation. The Senior Credit Facility terminates
on March 31, 2001. The Senior Credit Facility bears interest at a floating rate
per annum equal to (at the Company's option): (i) 1.75% over LIBOR or (ii) 0.5%
over Bankers Trust Company's prime rate as in effect from time to time. The
Senior Credit Facility is available for working capital and general corporate
purposes, including acquisitions. The Company and its subsidiaries are required
under the Senior Credit Facility to pay the Agent and the lenders certain fees
and expenses, including an unused line fee, on a monthly basis. The obligations
of the Company and its subsidiaries under the Senior Credit Facility are secured
by a security interest in substantially all of the assets and properties of the
Company and its subsidiaries. Availability of loans and letters of credit under
the Senior Credit Facility is limited to a borrowing base constituted of 85% of
eligible accounts receivable, 70% of eligible inventory and a fixed asset
sublimit ($55.6 million as of September 30, 1998) that amortizes on a quarterly
basis.
On April 1, 1998, the Company borrowed $106.8 million under the Senior
Credit Facility to: (i) repay outstanding secured debt of approximately $96.5
million; (ii) buyout operating leases of approximately $9.3 million; and (iii)
pay prepayment penalties of approximately $1.0 million, leaving the Company with
approximately $17.3 million available under the Senior Credit Facility as of
such date. On May 13, 1998, all indebtedness outstanding under the Senior Credit
Facility as of such date was repaid with proceeds from the Offering.
As of September 30, 1998, the Company had outstanding borrowings under the
Senior Credit Facility of $143.4 million and letters of credit outstanding in
the amount of $25.1 million (including $21.6 million supporting the Company's
obligations under the Isaac Notes), leaving the Company with approximately $22.0
million available under the Senior Credit Facility as of such date. Borrowings
outstanding under the Senior Credit Facility as of September 30, 1998 bore
interest at a rate of approximately 7.5% per annum.
The Senior Credit Facility contains a number of covenants that, among other
things, restrict the ability of the Company to dispose of assets, incur
additional indebtedness, pay dividends, redeem its capital stock or make
distributions, create liens on assets, enter into sale and leaseback
transactions, make investments, loans or advances, make acquisitions, engage in
mergers or consolidations and form subsidiaries and otherwise restrict certain
corporate activities. In addition, the Company is required to comply with
specified financial ratios and tests. As a result of recent adverse market
conditions in the steel and metals sectors and the effect of such conditions on
the Company's results of operations, effective as of September 30, 1998, the
Company and its bank group amended the Company's $250 million Senior Credit
Facility to, among other things, modify the Company's minimum interest coverage
test. Pursuant to the amendment, the Company's interest coverage ratio tests (i)
for the quarters ending September 30, 1998 and December 31, 1998 were replaced
with tests of minimum aggregate six- and nine-month EBITDA amounts, respectively
and (ii) for the quarters ending March 31, 1999 and June 30, 1999 were amended
to apply to only the respective six- and nine-month periods then ended.
The Senior Credit Facility contains various events of default, including
defaults relating to payments, breaches of representations, warranties and
covenants, certain events of bankruptcy and insolvency, defaults on certain
other indebtedness, certain liens and encumbrances on assets and certain changes
of control of the Company.
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DESCRIPTION OF THE NEW NOTES
GENERAL
The Old Notes were issued, and the New Notes will be issued, by the Company
pursuant to an Indenture dated as of May 13, 1998 (the "Indenture"), among the
Company, the Guarantors and LaSalle National Bank, as trustee (the "Trustee"),
in a private transaction that is not subject to the registration requirements of
the Securities Act. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Notes are subject to all such
terms, and Holders of Notes are referred to the Indenture and the Trust
Indenture Act for a statement thereof. The following summary of certain
provisions of the Indenture does not purport to be complete and is qualified in
its entirety by reference to the Indenture, including the definitions therein of
certain terms used below. A copy of the Indenture is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and is
incorporated by reference herein. The definitions of certain terms used in the
following summary are set forth below under "--Certain Definitions." The term
"Company" as used in this Description of the New Notes refers only to Metal
Management, Inc. and does not include any of its Subsidiaries. Reference to the
Notes include the New Notes and the Old Notes unless the context otherwise
requires.
The New Notes will be general unsecured obligations of the Company and will
be subordinated in right of payment to all Senior Debt of the Company, whether
outstanding on the date of the Indenture or incurred thereafter. See
"--Subordination." The New Notes will be issued solely in exchange for an equal
principal amount of outstanding Old Notes pursuant to the Exchange Offer. The
form and terms of the New Notes will be identical in all material respects to
the form and terms of the Old Notes, except that (i) the New Notes have been
registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof, (ii) holders of New Notes will not be entitled
to any Liquidated Damages thereon pursuant to certain circumstances under the
Registration Rights Agreement and (iii) holders of New Notes will no longer be
entitled to certain other rights under the Registration Rights Agreement. The
New Notes will be issued only in fully registered form without coupons, in
denominations of $1,000 and integral multiples thereof. Principal of, premium,
if any, and interest on the Notes are payable, and the Notes are exchangeable
and transferable, at the office or agency of the Company in the City of New York
maintained for such purposes (which initially will be the corporate trust office
of the Trustee). See "--Form, Denomination, Transfer, Exchange and Book-Entry
Procedures." No service charge will be made for any registration of transfer,
exchange or redemption of the Notes, except in certain circumstances for any tax
or other governmental charge that may be imposed in connection therewith.
The Company's obligations under the New Notes will be unconditionally
guaranteed on an unsecured, senior subordinated basis, jointly and severally, by
each of the current Subsidiaries of the Company and each future Subsidiary of
the Company (other than Foreign Subsidiaries) that is material to the Company or
becomes a borrower under the Senior Credit Facility. See "--Subsidiary
Guarantees." As of the date of this Prospectus, all of the Company's
Subsidiaries were Restricted Subsidiaries. However, under certain circumstances,
the Company will be able to designate current or future Subsidiaries as
Unrestricted Subsidiaries.
PRINCIPAL, MATURITY AND INTEREST
The Notes will be limited in aggregate principal amount to $300.0 million,
of which $180.0 million principal amount was offered in the Offering, and will
mature on May 15, 2008. Interest on the Notes will accrue at the rate of 10% per
annum and will be payable in cash semi-annually in arrears on each May 15 and
November 15, commencing on November 15, 1998, to Holders of record on the
immediately preceding May 1 and November 1. Interest on the Notes will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from the date of original issuance. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months. Principal, interest,
premium and Liquidated Damages, if any, on the Notes will be payable at the
office or agency of the Company maintained for such purpose within the City and
State of New York or, at the option of the Company, payment of interest and
Liquidated Damages, if any, may be made by check mailed to the Holders of the
Notes at their respective addresses set
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forth in the register of Holders of Notes; provided that all payments with
respect to Global Notes and definitive notes the Holders of which have given
written wire transfer instructions to the Company will be required to be made by
wire transfer of immediately available funds to the accounts specified by the
Holders thereof. Until otherwise designated by the Company, the Company's office
or agency in New York will be the office of the Trustee maintained for such
purpose. The New Notes will be issued in minimum denominations of $1,000 and
integral multiples thereof.
SETTLEMENT AND PAYMENT
Payments by the Company in respect of the New Notes (including principal,
interest, premium and Liquidated Damages, if any) will be made in immediately
available funds. The New Notes are expected to be eligible to trade in the
PORTAL market and to trade in the Depositary's Same-Day Funds Settlement System,
and any permitted secondary market trading activity in the Notes will,
therefore, be required by the Depositary to be settled in immediately available
funds. No assurance can be given as to the effect, if any, of such settlement
arrangements on trading activity in the Notes.
Because of time zone differences, the securities account of a Euroclear or
CEDEL participant purchasing an interest in a Global Note from a Participant (as
defined herein) in DTC will be credited, and any such crediting will be reported
to the relevant Euroclear or CEDEL participant, during the securities settlement
processing day (which must be a business day for Euroclear and CEDEL)
immediately following the settlement date of DTC. DTC has advised the Company
that cash received in Euroclear or CEDEL as a result of sales of interests in a
Global Note by or through a Euroclear or CEDEL participant to a Participant in
DTC will be received with value on the settlement date of DTC but will be
available in the relevant Euroclear or CEDEL cash account only as of the
business day for Euroclear or CEDEL following DTC's settlement date.
SUBORDINATION
The payment of principal of, interest, premium and Liquidated Damages, if
any, on, and all other Obligations in respect of, the Notes will be subordinated
in right of payment, in certain circumstances as set forth in the Indenture, to
the prior payment in full in cash or Cash Equivalents of all Senior Debt,
whether outstanding on the date of the Indenture or thereafter incurred.
The Indenture provides that, upon any distribution to creditors of the
Company in a liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property, an assignment for the benefit of creditors or any
marshaling of the Company's assets and liabilities, the holders of Senior Debt
will be entitled to receive payment in full in cash or Cash Equivalents of all
Obligations due in respect of such Senior Debt (including interest after the
commencement of any such proceeding at the rate specified in the documents
relating to the applicable Senior Debt, whether or not the claim for such
interest is allowed as a claim in such proceeding) before the Holders of Notes
will be entitled to receive any payment on account of any Obligations with
respect to the Notes, and until all Obligations with respect to Senior Debt are
paid in full in cash or Cash Equivalents, any distribution to which the Holders
of Notes would be entitled will be made to the holders of Senior Debt (except
that Holders of Notes may receive Permitted Junior Securities and payments made
from the trust described below under "--Legal Defeasance and Covenant
Defeasance").
The Indenture also provides that the Company may not make any payment on
account of any Obligations in respect of the Notes (except in Permitted Junior
Securities or from the trust described below under "--Legal Defeasance and
Covenant Defeasance") if (i) a default in the payment of the principal of,
premium, if any, or interest on Designated Senior Debt occurs and is continuing,
or any judicial proceeding is pending to determine whether any such default has
occurred, or (ii) any other default occurs and is continuing with respect to
Designated Senior Debt that permits, or would permit, with the passage of time
or the giving of notice or both, holders of the Designated Senior Debt as to
which such default relates to accelerate its maturity and the Trustee receives a
notice of such default (a "Payment Blockage Notice") from the Company or the
holders of any Designated Senior Debt. Payments on the Notes may and shall be
resumed (a) in the case of a payment default, upon the date on which such
default is cured or waived or shall have ceased to exist,
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unless another default, event of default or other event that would prohibit such
payment shall have occurred and be continuing, or all Obligations in respect of
such Designated Senior Debt shall have been paid in full in cash or Cash
Equivalents and (b) in case of a nonpayment default, the earlier of the date on
which such nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received by the Trustee. No new
period of payment blockage may be commenced unless and until 360 days have
elapsed since the first day of effectiveness of the immediately prior Payment
Blockage Notice. No nonpayment default that existed or was continuing on the
date of delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice unless such default
shall have been subsequently cured or waived for a period of not less than 180
days.
The Indenture further requires that the Company promptly notify holders of
Senior Debt if payment of the Notes is accelerated because of an Event of
Default.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, Holders of Notes may recover less ratably than
creditors of the Company who are holders of Senior Debt. See "Risk
Factors--Subordination." The Company had approximately $165.0 million of Senior
Debt outstanding at September 30, 1998. The Indenture limits, subject to certain
financial tests, the amount of additional Indebtedness, including Senior Debt,
that the Company and its Restricted Subsidiaries can incur. See "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Disqualified Stock."
The New Notes will rank pari passu or senior in right of payment to all
Subordinated Indebtedness of the Company. At June 30, 1998, the Company had no
Subordinated Indebtedness outstanding, other than indebtedness represented by
the Notes.
SUBSIDIARY GUARANTEES
The Company's payment obligations under the New Notes will be jointly and
severally guaranteed on a senior subordinated basis (the "Subsidiary
Guarantees") by the Guarantors, which currently consists of all of the Company's
Subsidiaries. The Subsidiary Guarantee of each Guarantor will be subordinated to
the prior payment in full of all Senior Debt of such Guarantor and the amounts
for which the Guarantors will be liable under the guarantees issued from time to
time with respect to Senior Debt. The obligations of each Guarantor under its
Subsidiary Guarantee will be limited so as not to constitute a fraudulent
conveyance under applicable law. See, however, "Risk Factors--Fraudulent
Conveyance."
The Indenture provides that, except for a merger of a Guarantor with and
into the Company or another Guarantor, no Guarantor may consolidate or merge
with or into (whether or not such Guarantor is the surviving Person) another
corporation, Person or entity unless (i) subject to the provisions of the
following paragraph, the Person formed by or surviving any such consolidation or
merger (if other than such Guarantor) assumes all the obligations of such
Guarantor pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee under the Notes and the Indenture; (ii) immediately
after giving effect to such transaction, no Default or Event of Default exists;
and (iii) the Company would be permitted to incur, immediately after giving
effect to such transaction, at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the covenant described
below under the caption "--Incurrence of Indebtedness and Issuance of
Disqualified Stock."
The Indenture provides that in the event of a sale or other disposition of
all of the assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the capital stock of any
Guarantor, then such Guarantor (in the event of a sale or other disposition, by
way of such a merger, consolidation or otherwise, of all of the capital stock of
such Guarantor) or the corporation acquiring the property (in the event of a
sale or other disposition of all of the assets of such Guarantor) will be
released and relieved of any obligations under its Subsidiary Guarantee;
provided that the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of the Indenture. See "--Repurchase at
the Option of Holders--Asset Sales."
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OPTIONAL REDEMPTION
Except as described below, the Notes are not redeemable at the Company's
option prior to May 15, 2003. From and after May 15, 2003, the Notes will be
subject to redemption at the option of the Company, in whole or in part, upon
not less than 30 nor more than 60 days' written notice, at the redemption prices
(expressed as percentages of principal amount) set forth below, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on May 15
of each of the years indicated below:
<TABLE>
<CAPTION>
PERCENTAGE OF
YEAR PRINCIPAL AMOUNT
---- ----------------
<S> <C>
2003........................................................ 105.000%
2004........................................................ 103.333%
2005........................................................ 101.667%
2006 and thereafter......................................... 100.000%
</TABLE>
Prior to May 15, 2001, the Company may, at its option, on any one or more
occasions, redeem up to 35% of the aggregate principal amount of Notes
originally offered in the Offering at a redemption price equal to 110% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the redemption date, with the net proceeds of one or
more sales of Common Stock; provided that at least 65% of the original aggregate
principal amount of Notes remains outstanding immediately after the occurrence
of each such redemption; and provided further, that any such redemption shall
occur within 60 days of the date of the closing of the corresponding sale of
Common Stock. For purposes of this section, a repurchase by the Company or a
Restricted Subsidiary of the Notes in open market purchase transactions shall
not be deemed to be a redemption.
SELECTION AND NOTICE
Notices of redemption shall be mailed by first class mail at least 30 but
not more than 60 days before the redemption date to each Holder of Notes to be
redeemed at such Holder's registered address. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in principal
amount equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Note. On and after the
redemption date, unless the Company defaults in payment of the redemption price,
interest ceases to accrue on Notes or portions of Notes called for redemption.
MANDATORY REDEMPTION
Except as set forth below under "--Repurchase at the Option of Holders,"
the Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (of at least
$1,000 principal amount or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash (the "Change of Control Payment") equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of purchase. Within 30 days
following any Change of Control, the Company will mail a notice to each Holder
describing the transaction or transactions that constitute the Change of Control
and offering to repurchase Notes pursuant to the procedures required by the
Indenture and described in such notice. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
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The Indenture provides that, prior to complying with the provisions of this
covenant, but in any event within 30 days following a Change of Control, the
Company will either repay in full in cash or Cash Equivalents all outstanding
amounts under the Senior Credit Facility or offer to repay in full in cash or
Cash Equivalents all outstanding amounts under the Senior Credit Facility and
repay the Obligations held by each lender under the Senior Credit Facility who
has accepted such offer or obtain the requisite consents, if any, under the
Senior Credit Facility to permit the repurchase of the Notes required by this
covenant.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee for cancellation the Notes so accepted together with an Officer's
Certificate stating the aggregate principal amount of Notes or portions thereof
being purchased by the Company. The Paying Agent will promptly mail to each
Holder of Notes so tendered the Change of Control Payment for such Notes, and
the Trustee will promptly authenticate and mail (or cause to be transferred by
book entry) to each Holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any; provided that each such
new Note will be in a principal amount of $1,000 or an integral multiple
thereof. The Company will publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the Notes to require that the Company
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
The existence of a Holder's right to require the Company to repurchase such
Holder's Notes upon the occurrence of a Change of Control may deter a third
party from seeking to acquire the Company in a transaction that would constitute
a Change of Control.
ASSET SALES
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, cause or make an Asset Sale unless (i) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value (evidenced by a resolution of the Board of Directors, which in the case of
an Asset Sale with a Fair Market Value exceeding $5 million, shall be set forth
in an Officer's Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash or Cash Equivalents; provided that the amount of (x) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet) of the Company or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any guarantee thereof) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases the Company
or such Restricted Subsidiary from further liability and (y) any notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are immediately converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of this provision.
Within 270 days after the Company's or any Restricted Subsidiary's receipt
of the Net Proceeds of any Asset Sale, the Company or such Restricted
Subsidiary, at its option, may apply (or, in the case of clause (ii) or (iii)
below, enter into a binding, definitive agreement within such time period to
apply) the Net Proceeds from such Asset Sale (i) to permanently reduce
Obligations under the Senior Credit Facility (and to correspondingly reduce
commitments with respect thereto) or other Senior Debt or Pari Passu
Indebtedness,
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(ii) to the acquisition of a controlling interest in any one or more businesses,
to the making of a capital expenditure (including the construction or
improvement of properties and capital assets) or the acquisition of long-term
assets, in each case, that is engaged in or that is used or useful in a
Principal Business and/or (iii) to an investment in properties or assets that
replace the properties and assets that are the subject of such Asset Sale.
Pending the final application of any such Net Proceeds, the Company or such
Restricted Subsidiary may temporarily reduce Indebtedness under a revolving
credit facility, if any, or otherwise invest such Net Proceeds in Cash
Equivalents. The Indenture will provide that any Net Proceeds from the Asset
Sale that are not invested as provided and within the time period set forth in
the first sentence of this paragraph will be deemed to constitute "Excess
Proceeds". When the aggregate amount of Excess Proceeds exceeds $10.0 million,
the Company will be required to make an offer to all Holders of Notes (an "Asset
Sale Offer") to purchase the maximum principal amount of Notes, that is an
integral multiple of $1,000, that may be purchased out of the Excess Proceeds at
an offer price in cash in an amount equal to 100% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date fixed for the closing of such offer, in accordance with the
procedures set forth in the Indenture. The Company will commence an Asset Sale
Offer with respect to Excess Proceeds within ten business days after the date
that the aggregate amount of Excess Proceeds exceeds $10.0 million by mailing
the notice required pursuant to the terms of the Indenture, with a copy to the
Trustee. To the extent that the aggregate amount of Notes tendered pursuant to
an Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds for any purpose not prohibited by the Indenture. If
the aggregate principal amount of Notes surrendered by Holders thereof exceeds
the amount of Excess Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis. Upon completion of any such Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of an Asset Sale.
The Senior Credit Facility currently prohibits the Company from purchasing
any Notes under certain circumstances, and also provides that certain change of
control events with respect to the Company would constitute a default
thereunder. Any future credit agreements or other agreements relating to Senior
Debt to which the Company becomes a party may contain similar restrictions and
provisions. In the event a Change of Control occurs or an Asset Sale Offer is
required to be made at a time when the Company is prohibited from purchasing
Notes, the Company could seek the consent of the lenders under the Senior Credit
Facility or such future agreements relating to Senior Debt to the purchase of
Notes or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will remain prohibited from purchasing Notes. In such
case, the Company's failure to make such offer or to purchase tendered Notes
would constitute an Event of Default under the Indenture. See "--Events of
Defaults and Remedies."
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay
any dividend or make any other payment or distribution on account of the
Company's Equity Interests (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company); (ii) purchase,
redeem, defease or otherwise acquire or retire for value any Equity Interests of
the Company or any direct or indirect parent of the Company; (iii) make any
principal payment on, or purchase, redeem, defease or otherwise acquire or
retire for value any Subordinated Indebtedness, except at final maturity or
scheduled installment or sinking fund payments; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being
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collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
immediately after giving pro forma effect thereto as if such Restricted
Payment had been made at the beginning of the applicable four-quarter
period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
the first paragraph of the covenant described below under the caption
"--Incurrence of Indebtedness and Issuance of Disqualified Stock"; and
(c) the amount of such Restricted Payment, together with the
aggregate amount of all other Restricted Payments made by the Company and
its Restricted Subsidiaries after the date of the Indenture (including
Restricted Payments permitted by clauses (i), (vi) and (viii) of the next
succeeding paragraph, but excluding all other Restricted Payments permitted
by the next succeeding paragraph), is less than the sum of (i) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the fiscal quarter immediately
following the date of the Indenture to the end of the Company's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds received by the Company from
the issue or sale since the date of the Indenture of Equity Interests of
the Company (including the net cash proceeds of any exercise or conversion
payments with respect to Equity Interests) or of Disqualified Stock or debt
securities of the Company that have been converted into such Equity
Interests (other than Equity Interests, Disqualified Stock or convertible
debt securities of the Company sold to a Restricted Subsidiary of the
Company and other than Disqualified Stock or debt securities that have been
converted into Disqualified Stock), plus (iii) 100% of the aggregate
amounts contributed to the capital of the Company since the date of the
Indenture, plus (iv) to the extent that any Restricted Investment that was
made after the date of the Indenture was sold for cash or was repaid, the
lesser of (A) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (B) the initial
amount of such Restricted Investment, plus (v) without duplication, to the
extent that any Unrestricted Subsidiary is designated by the Company as a
Restricted Subsidiary, an amount equal to the lesser of (A) the net book
value of the Company's Investment in such Unrestricted Subsidiary at the
time of such designation and (B) the Fair Market Value of such Investment
at the time of such designation, plus (vi) 50% of any cash dividends
received by the Company or a Restricted Subsidiary of the Company (except
to the extent that such dividends were already included in Consolidated Net
Income and, in the case of a Restricted Subsidiary, only to the extent of
the Company's ownership interest in such Restricted Subsidiary) after the
date of the Indenture from an Unrestricted Subsidiary of the Company.
The foregoing provisions will not prohibit:
(i) the payment of any dividend or redemption payment within 60 days
after the date of declaration thereof, if at the date of declaration such
payment would have complied with the provisions of the Indenture;
(ii) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company or any Restricted Subsidiary or any
Subordinated Indebtedness of the Company in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of Equity Interests of the Company (other than
any Disqualified Stock); provided that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase, retirement
or other acquisition shall be excluded from clause (c)(ii) of the preceding
paragraph;
(iii) the defeasance, redemption, repurchase, retirement or other
acquisition of Subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness;
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(iv) the redemption, repurchase, retirement or other acquisition of
Subordinated Indebtedness; provided that the aggregate price paid for all
such redemptions, repurchases, retirements or other acquisitions since the
date of the Indenture does not exceed the principal amount (or, in the case
of Indebtedness issued with original issue discount, the consideration
received by the Company or any Restricted Subsidiary) of such Subordinated
Indebtedness incurred by the Company or any of its Restricted Subsidiaries
since the date of the Indenture; and provided further, that the amount of
any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement or other acquisition shall be excluded from the
immediately preceding clause (iii) and from clause (c)(ii) of the preceding
paragraph;
(v) repurchases of Equity Interests deemed to occur upon exercise of
stock options if such Equity Interests represent a portion of the exercise
price of such options;
(vi) repurchases or redemptions of Equity Interests held by officers
or employees or former officers or employees of the Company or any
Restricted Subsidiary pursuant to any employment or other written
agreement, in an aggregate amount not to exceed $2 million in any fiscal
year, and any such repurchases or redemptions funded by life insurance
proceeds received by the Company upon the death of an insured officer or
employee;
(vii) the acquisition by the Company of Equity Interests previously
issued and delivered to an escrow agent pursuant to an escrow agreement or
previously issued but never delivered pursuant to contingent or "earn-out"
payments, in each case in connection with the acquisition agreements of the
Company or any Subsidiary;
(viii) the payment of any dividend on, or the redemption of, the
Company Preferred Stock, in each case in accordance with the terms thereof
as in effect on the date of the Indenture; provided that (other than in the
case of a dividend payable solely in Equity Interests of the Company) the
Fixed Charge Coverage Ratio for the Company for the most recently ended
four full fiscal quarters for which internal financial statements are
available immediately preceding the date of such payment, redemption,
repurchase, retirement or other acquisition would have been at least 2.0 to
1.0 determined on a pro forma basis, as if such payment, redemption,
repurchase, retirement or other acquisition, together with any other
payments, redemptions, repurchases, retirements and other acquisitions
permitted by this clause (viii) occurring during the preceding twelve-month
period, had occurred at the beginning of the applicable four-quarter
period;
(ix) guarantees of obligations of Unrestricted Subsidiaries or
Permitted Joint Ventures by the Company or a Restricted Subsidiary (other
than obligations constituting Indebtedness of the Company or a Restricted
Subsidiary) to the extent that a cash Investment by the Company or such
Restricted Subsidiary would be permitted in such Unrestricted Subsidiaries
under this covenant; provided, however, that the extension of any such
guarantees shall be deemed to be an Investment by the Company or such
Restricted Subsidiary in an amount equal to the obligations subject to the
guarantees and shall be deemed to be made at the time of such extension;
and
(x) the making of other Restricted Payments not to exceed $10 million
in the aggregate;
provided further, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (iv), (v), (viii) or (ix) above, no
Default or Event of Default shall have occurred and be continuing or would occur
as a consequence thereof; and provided further that for purposes of determining
the aggregate amount expended for Restricted Payments in accordance with clause
(c) of the immediately preceding paragraph, only the amounts expended under
clauses (i), (vi) and (viii) shall be included.
As of the date of this Prospectus, all of the Company's Subsidiaries are
Restricted Subsidiaries. The Company will not permit any Unrestricted Subsidiary
to become a Restricted Subsidiary except pursuant to the last sentence of the
definition of "Unrestricted Subsidiary." For purposes of designating any
Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments
by the Company and its Restricted Subsidiaries (except to the extent repaid) in
the Subsidiary so designated will be deemed to be Restricted Payments in an
amount equal to the Fair Market Value of such Investment at the time of such
designation.
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Such designation will only be permitted if a Restricted Payment in such amount
would be permitted to be made at such time and if such Subsidiary otherwise
meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries
will not be subject to any of the restrictive covenants set forth in the
Indenture.
The amount of all Restricted Payments (other than cash) shall be the Fair
Market Value (evidenced by a resolution of the Board of Directors set forth in
an Officer's Certificate delivered to the Trustee) on the date of the Restricted
Payment of the asset(s) proposed to be transferred by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
Not later than the date of making any Restricted Payment with a Fair Market
Value in excess of $5 million, the Company shall deliver to the Trustee an
Officer's Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by the "Restricted
Payments" covenant were computed, which calculations may be based upon the
Company's latest available financial statements.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur" and
correlatively, an "incurrence" of) any Indebtedness (including Acquired Debt)
and that the Company will not issue any Disqualified Stock and will not permit
any of its Restricted Subsidiaries to issue any shares of Preferred Stock;
provided, however, that the Company may incur Indebtedness (including Acquired
Debt) or issue shares of Disqualified Stock if the Fixed Charge Coverage Ratio
for the Company for the most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date of
such incurrence would have been at least 2.0 to 1.0 determined on a Pro Forma
Basis.
The foregoing provisions will not apply to:
(a) the incurrence by the Company or any of its Restricted
Subsidiaries of indebtedness under the Senior Credit Facility and
Guarantees thereof by the Guarantors so long as, immediately after any such
incurrence, the aggregate principal amount outstanding under the Senior
Credit Facility (together with any Permitted Refinancing Indebtedness
incurred to refund, replace or refinance any Indebtedness incurred pursuant
to the Senior Credit Facility) pursuant to this paragraph (a) does not
exceed an amount equal to the greater of (x) $200.0 million, less the
aggregate amount of all Loan Reductions and (y) the sum of (i) 85% of the
consolidated book value of the accounts receivable of the Company and its
Restricted Subsidiaries, (ii) 70% of the consolidated book value of the
inventory of the Company and its Restricted Subsidiaries and (iii) the
orderly liquidation value of the Company's property, plant and equipment
(initially $40 million), subject to automatic and permanent reduction by
$1.4 million each quarter, commencing July 1, 1998, and subject to
increases (but not in excess of $40 million) based on increases in the
orderly liquidation value of the Company's property, plant and equipment
resulting from acquisitions completed by the Company (as set forth in the
appraisals accepted by the agent under the Senior Credit Facility and
provided that the automatic and permanent reduction described above shall
be increased by the amount of any such increase divided by 28); provided,
however, that in no event may the aggregate principal amount outstanding
under the Senior Credit Facility pursuant to this paragraph (a) exceed
$300.0 million; and provided, further, that the amount of Indebtedness
which may be incurred under the Senior Credit Facility pursuant to this
paragraph (a) shall be reduced by the principal amount of any Acquired Debt
incurred solely pursuant to paragraph (j) below;
(b) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by the Notes and the Subsidiary
Guarantees in an amount not to exceed $180.0 million;
(c) Guarantees by the Company or a Guarantor of Indebtedness incurred
by the Company or a Restricted Subsidiary of the Company so long as the
incurrence of such Indebtedness by the primary obligor thereon was
permitted under the terms of the Indenture;
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(d) the incurrence by the Company or a Restricted Subsidiary of the
Company of intercompany Indebtedness between or among the Company and any
of its Restricted Subsidiaries; provided, however, that (i) all such
intercompany Indebtedness is expressly subordinate to the prior payment in
full of all Obligations with respect to the Notes and the Subsidiary
Guarantees and (ii)(A) any subsequent issuance or transfer of Equity
Interests that results in any such intercompany Indebtedness being held by
a Person other than the Company or a Restricted Subsidiary and (B) any sale
or transfer of any such intercompany Indebtedness to a Person that is not
either the Company or a Restricted Subsidiary of the Company shall be
deemed, in each case, to constitute an incurrence of such Indebtedness by
the Company or such Restricted Subsidiary, as the case may be, that is not
permitted by this clause (d);
(e) the incurrence by the Company or any Restricted Subsidiary of
Indebtedness (including reimbursement obligations relating thereto) in
respect of bid, payment or performance bonds, bankers' acceptances, letters
of credit and surety or appeal bonds, or guarantees of such obligations of
others, in the ordinary course of business;
(f) the issuance by a Restricted Subsidiary of the Company of any
shares of Preferred Stock to the Company or any of its Restricted
Subsidiaries, provided, however, that (i) all such Preferred Stock is
expressly subordinate to the prior payment in full of all Obligations with
respect to the Notes and the Subsidiary Guarantees and (ii) (A) any
subsequent issuance or transfer of Equity Interests that results in any
such Preferred Stock being held by a Person other than the Company or a
Restricted Subsidiary and (B) any sale or transfer of any such shares of
Preferred Stock to a Person that is not either the Company or a Restricted
Subsidiary of the Company shall be deemed, in each case, to constitute an
issuance of such Preferred Stock by such Restricted Subsidiary that is not
permitted by this clause (f);
(g) Hedging Obligations of the Company or a Restricted Subsidiary
that are incurred (1) for the purpose of fixing or hedging interest rate
risk with respect to any Indebtedness that is permitted by the terms of the
Indenture to be outstanding or (2) for the purpose of fixing or hedging
currency exchange rate risk with respect to any currency exchanges or
commodity price risk with respect to commodities utilized by the Company in
the ordinary course of business;
(h) subject to paragraph (a) above, the incurrence by the Company or
any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in
exchange for, or the net proceeds of which are used to extend, refinance,
renew, replace, defease or refund, Indebtedness that was permitted by the
Indenture to be incurred;
(i) the incurrence of Indebtedness (but excluding any funded
Indebtedness) arising from agreements providing for indemnification,
adjustment of purchase price or similar Obligations, incurred or assumed in
connection with the acquisition or disposition of any business by the
Company or any Restricted Subsidiary;
(j) the incurrence of any Acquired Debt in an aggregate principal
amount permitted solely by this clause (j) not to exceed $25 million at any
one time outstanding;
(k) Capital Lease Obligations and Purchase Money Indebtedness of the
Company or any of its Restricted Subsidiaries (including any Permitted
Refinancing Indebtedness incurred to refund, replace or refinance any
Capital Lease Obligations or Purchase Money Indebtedness incurred pursuant
to this clause (k)) not to exceed $10 million at any one time outstanding;
and
(l) additional Indebtedness of the Company or any of its Restricted
Subsidiaries (including any Permitted Refinancing Indebtedness incurred to
refund, replace or refinance any Indebtedness incurred pursuant to this
clause (l)) in an aggregate principal amount not to exceed $30 million at
any one time outstanding (which Indebtedness may, but need not, be incurred
under the Senior Credit Facility).
ANTI-LAYERING
The Indenture provides that (i) the Company will not directly or indirectly
incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is subordinate or junior in right of payment to
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any Senior Debt and senior in any respect in right of payment to the Notes and
(ii) no Guarantor will incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to its Senior Debt and senior in any respect in right of payment to the
Subsidiary Guarantees.
SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, enter into any sale and leaseback
transaction; provided that the Company may enter into a sale and leaseback
transaction if (i) the Company could have (a) incurred Indebtedness in an amount
equal to the Attributable Debt relating to such sale and leaseback transaction
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described above under the caption "--Incurrence of
Indebtedness and Issuance of Disqualified Stock" and (b) incurred a Lien to
secure such Indebtedness pursuant to the covenant described below under the
caption "--Liens", (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the Fair Market Value (as determined in good
faith by the Board of Directors and, in the case of a sale and leaseback
transaction having a Fair Market Value in excess of $5 million, set forth in an
Officer's Certificate delivered to the Trustee) of the property that is the
subject of such sale and leaseback transaction and (iii) the transfer of assets
in such sale and leaseback transaction is permitted by, and the Company applies
the proceeds of such transaction in compliance with, the covenant described
above under the caption "--Repurchase at the Option of Holders--Asset Sales."
LIENS
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien that secures obligations under any Pari Passu
Indebtedness or Subordinated Indebtedness on any asset or property now owned or
hereafter acquired by the Company or any of its Restricted Subsidiaries, or any
income or profits therefrom or assign or convey any right to receive income
therefrom, unless the Notes are equally and ratably secured with the obligations
so secured or until such time as such obligations are no longer secured by a
Lien; provided that in any case involving a Lien securing Subordinated
Indebtedness, such Lien is subordinated to the Lien securing the Notes on a
basis no less favorable than such Subordinated Indebtedness is subordinated to
the Notes.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries (1) on
its Capital Stock or (2) with respect to any other interest or participation in,
or measured by, its profits, or (b) pay any indebtedness owed to the Company or
any of its Restricted Subsidiaries, (ii) make loans or advances to the Company
or any of its Restricted Subsidiaries or (iii) sell, lease or transfer any of
its properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (a)
Existing Indebtedness as in effect on the date of the Indenture, (b) the Senior
Credit Facility as in effect as of the date of the Indenture and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, in whole or in part, provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are no more restrictive in any material
respect with respect to such dividend and other payment restrictions than those
contained in the Senior Credit Facility as in effect on the date of the
Indenture, (c) the Indenture and the Notes, (d) applicable law, (e) Indebtedness
or Capital Stock of a Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the Indenture to
be incurred, (f) by reason of nonassignment or net worth
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maintenance provisions in leases entered into in the ordinary course of
business, (g) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, or (h) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive in any
material respect than those contained in the agreements governing the
Indebtedness being refinanced.
ADDITIONAL SUBSIDIARY GUARANTEES
The Indenture provides that if (i) the Company acquires or creates any
additional Subsidiary that is a Restricted Subsidiary and (A) any such
Restricted Subsidiary has assets or revenues in any fiscal year in excess of
$200,000, or (B) any such Restricted Subsidiary previously in existence has
assets or revenues in any fiscal year in excess of $200,000, or (C) any such
Restricted Subsidiary, together with all other Restricted Subsidiaries which are
not Guarantors, has assets or revenues in any fiscal year in excess of $1.0
million in the aggregate, or (ii) any Restricted Subsidiary of the Company that
is not a Guarantor guarantees any Indebtedness of the Company other than the
Notes or is a borrower under the Senior Credit Facility (in each case described
in clauses (i) and (ii), except for Foreign Subsidiaries), the Company will
cause such Restricted Subsidiary to execute and deliver to the Trustee a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee pursuant to which such Restricted Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes on the terms set
forth in such supplemental indenture.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions to, another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company) or
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made assumes all the obligations of the
Company under the Notes and the Indenture pursuant to a supplemental indenture
in a form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; and (iv) except in the case
of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of
the Company, the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (A) will have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of the Company immediately
prior to the transaction and (B) will, at the time of such transaction and after
giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of the covenant described above under the
caption "--Incurrence of Indebtedness and Issuance of Disqualified Stock." The
sale, assignment, transfer, lease, conveyance or other disposition by the
Company or its Restricted Subsidiaries of all or substantially all of their
respective property or assets to one or more of their Subsidiaries shall not
relieve either the Company or the Restricted Subsidiaries from their respective
obligations under the Indenture or the Notes. Subject to the foregoing, any
Restricted Subsidiary may consolidate with, merge into or transfer all or part
of its properties and assets to the Company or any other Restricted Subsidiary
or other entity that becomes, by reason of such consolidation, merger or
transfer, a Restricted Subsidiary.
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TRANSACTIONS WITH AFFILIATES
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Restricted Subsidiary than those that might reasonably have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $2.0 million, a
certificate of the Chief Executive Officer of the Company certifying that such
Affiliate Transaction complies with clause (i) above, (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, a resolution of the Board of
Directors set forth in an Officer's Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members of the Board of
Directors and (c) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $10.0
million, an opinion as to the fairness to the Holders of the Notes of such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing.
The foregoing provisions will not apply to the following: (i) transactions
between or among the Company and/or any of its Restricted Subsidiaries in which
no Affiliate of the Company owns Capital Stock (other than directors' qualifying
shares); (ii) Restricted Payments or Permitted Investments permitted by the
provisions of the Indenture described above under the caption entitled
"--Restricted Payments"; and (iii) the payment of reasonable and customary
regular fees and compensation (including compensation payable in Equity
Interests) to, and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Subsidiary or Permitted Joint
Venture of the Company.
LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY OWNED RESTRICTED
SUBSIDIARIES
The Indenture provides that the Company (i) will not, and will not permit
any Wholly Owned Restricted Subsidiary of the Company to, transfer, convey,
sell, lease or otherwise dispose of any Capital Stock of any Wholly Owned
Restricted Subsidiary of the Company to any Person (other than the Company or a
Wholly Owned Restricted Subsidiary of the Company), unless (a) such transfer,
conveyance, sale, lease or other disposition is of all the Capital Stock of such
Wholly Owned Restricted Subsidiary and (b) the cash Net Proceeds from such
transfer, conveyance, sale, lease or other disposition are applied in accordance
with the covenant described above under the caption "--Repurchase at the Option
of Holders--Asset Sales," and (ii) will not permit any Wholly Owned Restricted
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Wholly Owned Restricted
Subsidiary of the Company.
BUSINESS ACTIVITIES
The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business other than a Principal Business, except to such extent as
would not be material to the Company and its Restricted Subsidiaries, taken as a
whole.
REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the Securities and Exchange Commission (the "Commission"), so
long as any Notes are outstanding, the Company will furnish to the Trustee (i)
all quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
were required to file such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's certified
independent
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accountants and (ii) all current reports that would be required to be filed with
the Commission on Form 8-K if the Company were required to file such reports. In
addition, whether or not required by the rules and regulations of the
Commission, commencing immediately after the consummation of the Exchange Offer
contemplated by the Registration Rights Agreement, the Company will file a copy
of all such information and reports with the Commission (which may be contained
in Forms 10-K, 10-Q and 8-K) for public availability (unless the Commission will
not accept such a filing). In addition, the Company and the Guarantors have
agreed that, for so long as any Notes remain outstanding, they will furnish to
the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest or
Liquidated Damages, if any, on the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (iii) failure by the Company to
comply with the provisions described above under the captions "Repurchase at the
Option of Holders--Change of Control", "Repurchase at the Option of
Holders--Asset Sales" or "Certain Covenants--Merger, Consolidation or Sale of
Assets"; (iv) failure by the Company for 60 days after notice from the Trustee
or the Holders of at least 25% in aggregate principal amount of the then
outstanding Notes to comply with any of its other covenants, agreements or
warranties in the Indenture or the Notes; (v) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness the maturity
of which has been so accelerated, aggregates $10 million or more; (vi) failure
by the Company or any of its Restricted Subsidiaries to pay final judgments for
the payment of money damages aggregating in excess of $10 million, which
judgments are not paid, discharged or stayed for a period of 60 days; (vii)
except as permitted by the Indenture, any Significant Subsidiary Guarantee shall
be held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect (except by its terms) or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Significant Subsidiary Guarantee, in each
case if such default continues for a period of ten days after notice to the
Company from the Trustee or the Holders of at least 25% in aggregate principal
amount of the then outstanding Notes; and (viii) certain events of bankruptcy or
insolvency with respect to the Company or any of its Significant Subsidiaries.
If any Event of Default (other than an Event of Default under clause (viii)
of the preceding paragraph with respect to the Company) occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes, by notice to the Trustee and the Company, may
declare all the Notes to be due and payable immediately; provided, however, that
so long as the Senior Credit Facility shall be in full force and effect, if an
Event of Default shall have occurred and be continuing (other than an Event of
Default under clause (viii) of the preceding paragraph with respect to the
Company), any such acceleration shall not be effective until the earlier to
occur of (x) five days following the delivery of a notice of such acceleration
to the agent or other representative of the lenders under the Senior Credit
Facility and (y) acceleration of any Indebtedness under the Senior Credit
Facility. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency described in clause
(viii) of the preceding paragraph, with respect to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes will become due and payable
without further action or notice. Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a
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Default or Event of Default relating to the payment of principal, interest or
Liquidated Damages, if any) if it determines that withholding notice is in their
interest.
The Indenture provides that, at any time after a declaration of
acceleration with respect to the Notes, the Holders of a majority in principal
amount of the Notes may rescind and cancel such declaration and its consequences
(i) if the rescission would not conflict with any judgment or decree, (ii) if
all existing Events of Default have been cured or waived except nonpayment of
principal, interest or Liquidated Damages that has become due solely because of
the acceleration, (iii) if, to the extent the payment of such interest is
lawful, interest on overdue installments of interest and overdue principal at a
rate equal to the rate borne by the Notes, which has become due otherwise than
by such declaration of acceleration, has been paid, (iv) if the Company has paid
the Trustee its reasonable compensation and reimbursed the Trustee for its
expenses, disbursements and advances and (v) if, in the event of the cure or
waiver of an Event of Default of the type described in clause (viii) of the
description above of Events of Default, the Trustee shall have received an
Officer's Certificate and an opinion of counsel that such Event of Default has
been cured or waived. No such rescission shall affect any subsequent Default or
impair any right consequent thereto.
The Holders of a majority in principal amount of the Notes may waive any
existing Default or Event of Default under the Indenture and its consequences,
except a default in the payment of the principal of or interest on, or
Liquidated Damages with respect to, any Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any Guarantor, as such, shall have any liability for any obligations of the
Company or the Guarantors under the Notes, the Subsidiary Guarantees, the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium and Liquidated Damages,
if any, and interest on such Notes when such payments are due from the trust
referred to below, (ii) the Company's obligations with respect to the Notes
concerning issuing temporary Notes, registration of Notes, mutilated, destroyed,
lost or stolen Notes and the maintenance of an office or agency for payment and
money for security payments held in trust, (iii) the rights, powers, trusts,
duties and immunities of the Trustee, and the Company's obligations in
connection therewith and (iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to certain covenants that are
described in the Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment or certain bankruptcy, receivership,
rehabilitation and insolvency events) described above under the caption
"--Events of Default" will no longer constitute an Event of Default with respect
to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium and Liquidated Damages, if any, and interest on
the outstanding Notes on the stated maturity or on the applicable redemption
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date, as the case may be, and the Company must specify whether the Notes are
being defeased to maturity or to a particular redemption date; (ii) either (x)
in the case of Legal Defeasance, the Company shall have delivered to the Trustee
an opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that (A) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the date of the
Indenture, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion of counsel shall
confirm that, the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred, or (y) in the case of Covenant Defeasance, the
Company shall have delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred; (iii) no
Default or Event of Default shall have occurred and be continuing on the date of
such deposit (other than a Default or Event of Default resulting from the
borrowing of funds to be applied to such deposit) or insofar as Events of
Default from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of such deposit; (iv) such Legal
Defeasance or Covenant Defeasance will not result in a breach or violation of,
or constitute a default under the Senior Credit Facility or any other material
agreement or instrument (other than the Indenture) to which the Company or any
of its Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound; (v) the Company must have delivered to the
Trustee an opinion of counsel to the effect that (assuming no intervening
bankruptcy or insolvency of the Company between the date of such deposit and the
91st day after such deposit and that no Holder is an insider of the Company)
after the 91st day following the deposit, the trust funds will not be subject to
the effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally; (vi) the Company must deliver to the
Trustee an Officer's Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders of Notes over the other
creditors of the Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and (vii) the Company must
deliver to the Trustee an Officer's Certificate and an opinion of counsel, each
stating that all conditions precedent provided for or relating to the Legal
Defeasance or the Covenant Defeasance, as the case may be, have been complied
with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
FORM, DENOMINATION, TRANSFER, EXCHANGE AND BOOK-ENTRY PROCEDURES
The Old Notes offered and sold to qualified institutional buyers (as
defined under Rule 144A) ("QIBs") were each registered in book-entry form, are
represented by a global note in fully registered form without interest coupons,
which was deposited with the Trustee as custodian for The Depository Trust
Company ("DTC") and registered in the name of Cede & Co. or such other nominee
as DTC may designate.
The Old Notes offered and sold to persons outside the United States who
received such Old Notes pursuant to sales in accordance with Regulation S were
each initially represented by a global note certificate in fully registered form
without interest coupons (the "Offshore Global Old Note"). The Offshore Global
Old Note was deposited with the Trustee as custodian for DTC and registered in
the name of Cede & Co. Prior to the expiration of the "40-day restricted period"
within the meaning of Rule 903 of Regulation S, transfers of
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interest in the Offshore Global Old Note were only effected through records
maintained by DTC, Cedel Bank, societe anonyme ("CEDEL") or Euroclear System
("Euroclear").
The certificates representing the New Notes will be issued in fully
registered form without interest coupons. Except as described below, the New
Notes will be deposited with, or on behalf of, DTC, and registered in the name
of Cede & Co as DTC's nominee, in the form of a global New Note certificate (the
"Global New Note") or will remain in the custody of the Trustee pursuant to the
FAST Balance Certificate between DTC and the Trustee.
Holders of New Notes who elect to take physical delivery of their
certificates instead of holding their interest through the Global New Note
(collectively referred to herein as the "Non-Global Holders") will be issued in
registered form a certificated New Note ("Certificated New Note"). Upon the
transfer of any Certificated New Note initially issued to a Non-Global Holder,
such Certificated New Note will, unless the transferee requests otherwise or the
Global New Note has previously been exchanged in whole for Certificated New
Notes, be exchanged for an interest in the Global New Note.
EXCHANGES OF INTERESTS IN THE GLOBAL NEW NOTE FOR CERTIFICATED NEW NOTES
A beneficial interest in the Global New Note may not be exchanged for a
Certificated New Note unless (i) DTC (x) notifies the Company that it is
unwilling or unable to continue as Depositary for the Global New Note or (y) has
ceased to be a clearing agency registered under the Exchange Act, and in either
case the Company thereupon fails to appoint a successor Depositary, (ii) the
Company, at its option, notifies the Trustee in writing that it elects to cause
the issuance of the Certificated New Notes or (iii) there shall have occurred
and be continuing an Event of Default or any event which after notice or lapse
of time or both would be an Event of Default with respect to the Notes. In all
cases, Certificated New Notes delivered in exchange for any Global New Note or
beneficial interests therein will be registered in the names, and issued in any
approved denominations, requested by or on behalf of the Depositary (in
accordance with its customary procedures). Any Certificated New Note issued in
exchange for an interest in a Global New Note will bear the legend restricting
transfers that is borne by such Global New Note. Any such exchange will be
effected through the DWAC System and an appropriate adjustment will be made in
the records of the Security Registrar to reflect a decrease in the principal
amount of the Global New Note.
DEPOSITORY PROCEDURES
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic
book-entry changes in accounts of its Participants. The Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. Access to DTC's system is also available to
other entities such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly (collectively, the "Indirect Participants"). Persons who are not
Participants may beneficially own securities held by or on behalf of DTC only
through the Participants or the Indirect Participants. The ownership interests
and transfer of ownership interests of each actual purchaser of each security
held by or on behalf of DTC are recorded on the records of the Participants and
Indirect Participants.
DTC has also advised the Company that, pursuant to procedures established
by it, (i) upon deposit of the Global New Note, DTC will credit the principal
amount at maturity of New Notes of the individual beneficial interests
represented by such Global New Note to the respective accounts of Participants
and (ii) ownership of beneficial interests in the Global New Note will be shown
on, and the transfer of ownership thereof will be effected only through, records
maintained by DTC or its nominee (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global New Note).
Investors in the Global New Note may hold their interests therein directly
through DTC, if they are participants in such system, or indirectly through
organizations (including Euroclear and CEDEL) which are participants in such
system. All interests in the Global New Note, including those held through
Euroclear or
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CEDEL, may be subject to the procedures and requirements of DTC. Those interests
held through Euroclear or CEDEL may also be subject to the procedures and
requirements of such systems. The laws of some states require that certain
persons take physical delivery in definitive form of securities that they own.
Consequently, the ability to transfer beneficial interests in the Global New
Note to such persons will be limited to that extent. Because DTC can act only on
behalf of Participants, which in turn act on behalf of Indirect Participants and
certain banks, the ability of a person having beneficial interests in the Global
New Note to pledge such interests to persons or entities that do not participate
in the DTC system, or otherwise take actions in respect of such interests, may
be affected by the lack of a physical certificate evidencing such interests. For
certain other restrictions on the transferability of the Notes, see "--Exchanges
of Interests in the Global New Note for Certificated New Notes."
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NEW NOTE WILL
NOT HAVE NEW NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY
OF NEW NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED
OWNERS OR HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of and premium and interest on the
Global New Note registered in the name of DTC or its nominee will be payable by
the Trustee to DTC in its capacity as the registered Holder under the Indenture.
Under the terms of the Indenture, the Company and the Trustee will treat the
persons in whose names the New Notes, including the Global New Note, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither the Company,
the Trustee nor any agent of the Company or the Trustee has or will have any
responsibility or liability for (i) any aspect of DTC's records or any
Participant's or Indirect Participant's records relating to or payments made on
account of beneficial ownership interests in the Global New Note, or for
maintaining, supervising or reviewing any of DTC's records or any Participant's
or Indirect Participant's records relating to the beneficial ownership interests
in the Global New Note or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised the Company that its current practice, upon receipt of any payment in
respect of securities such as the New Notes (including principal and interest),
is to credit the accounts of the relevant Participants with the payment on the
payment date, in amounts proportionate to their respective holdings in the
principal amount of beneficial interests in the relevant security as shown on
the records of DTC unless DTC has reason to believe it will not receive payment
on such payment date. Payments by the Participants and the Indirect Participants
to the beneficial owners of New Notes will be governed by standing instructions
and customary practices and will be the responsibility of the Participants or
the Indirect Participants and will not be the responsibility of DTC, the Trustee
or the Company. Neither the Company nor the Trustee will be liable for any delay
by DTC or any of its Participants in identifying the beneficial owners of the
New Notes, and the Company and the Trustee may conclusively rely on and will be
protected in relying on instructions from DTC or its nominee for all purposes.
Except for trades involving only Euroclear and CEDEL participants,
interests in the Global New Note are expected to be eligible to trade in DTC's
Same-Day Funds Settlement System and secondary market trading activity in such
interests will therefore settle in immediately available funds, subject in all
cases to the rules and procedures of DTC and its participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds, and transfers between
participants in Euroclear and CEDEL will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the New
Notes described herein, cross-market transfers between the Participants in DTC,
on the one hand, and Euroclear or CEDEL participants, on the other hand, will be
effected through DTC in accordance with DTC's rules on behalf of Euroclear or
CEDEL, as the case may be, by its respective depositary; however such
cross-market transactions will require delivery of instructions to Euroclear or
CEDEL, as the case may be, by the counterparty in such system in accordance with
the rules and procedures and within the established deadlines (Brussels time) of
such system. Euroclear or CEDEL, as the case may be, will, if the transaction
meets its settlement requirements, deliver instructions to its respective
depositary to take action to effect final settlement on its behalf by delivering
or receiving interests in the Global New Note in DTC, and making or receiving
payment in accordance with
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normal procedures for same-day funds settlement applicable to DTC. Euroclear
participants and CEDEL participants may not deliver instructions directly to the
depositories for Euroclear or CEDEL.
Because of time zone differences, the securities account of a Euroclear or
CEDEL participant purchasing an interest in the Global New Note from a
Participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear or CEDEL participant, during the securities settlement
processing day (which must be a business day for Euroclear and CEDEL)
immediately following the settlement date of DTC. DTC has advised the Company
that cash received in Euroclear or CEDEL as a result of sales of interests in
the Global New Note by or through a Euroclear or CEDEL participant to a
Participant in DTC will be received with value on the settlement date of DTC but
will be available in the relevant Euroclear or CEDEL cash account only as of the
business day for Euroclear or CEDEL following DTC's settlement date.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder of New Notes only at the direction of one or more Participants
to whose account with DTC interests in the Global New Note are credited and only
in respect of such portion of the aggregate principal amount of the New Notes as
to which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the New Notes, DTC reserves the
right to exchange the Global New Note for legended Certificated New Notes, and
to distribute such Certificated New Notes to its Participants.
The information in this section concerning DTC, Euroclear and CEDEL and
their book-entry systems has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures
to facilitate transfers of interests in the Global New Note among participants
in DTC, Euroclear and CEDEL, they are under no obligation to perform or to
continue to perform such procedures, and such procedures may be discontinued at
any time. Neither the Company nor the Trustee will have any responsibility for
the performance by DTC, Euroclear or CEDEL or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company, the Guarantors and the Initial Purchasers entered into the
Registration Rights Agreement on the Closing Date. Pursuant to the Registration
Rights Agreement, the Company agreed to file with the Commission, on or prior to
60 days after the Closing Date, the Exchange Offer Registration Statement on the
appropriate form under the Securities Act with respect to the New Notes. Upon
the effectiveness of the Exchange Offer Registration Statement, pursuant to the
Exchange Offer, the Company will offer to the Holders of Transfer Restricted
Securities (as defined below) who are able to make certain representations the
opportunity to exchange their Transfer Restricted Securities for New Notes. If
(i) the Company is not required to file the Exchange Offer Registration
Statement or permitted to consummate the Exchange Offer because the Exchange
Offer is not permitted by applicable law or Commission policy or (ii) any Holder
of Transfer Restricted Securities notifies the Company on or prior to the tenth
business day following consummation of the Exchange Offer that it (A) is
prohibited by law or Commission policy from participating in the Exchange Offer
or (B) may not resell the New Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales or (C) is a broker-dealer and owns Notes acquired directly from the
Company or an affiliate of the Company, the Company will file with the
Commission a Shelf Registration Statement to cover resales of the Notes by the
Holders thereof who satisfy certain conditions relating to the provision of
information in connection with the Shelf Registration Statement. The Company
will use commercially reasonable efforts to cause the applicable registration
statement to be declared effective as promptly as practicable by the Commission.
For purposes of the foregoing, "Transfer Restricted Securities" means each Old
Note until (i) the date on which such Old Note has been exchanged by a person
other than a broker-dealer for a New Note in the Exchange Offer, (ii) following
the exchange by a broker-dealer in the Exchange Offer of an Old Note for a New
Note, the date on which such New Note is sold to a purchaser who receives from
such broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the
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Exchange Offer Registration Statement, (iii) the date on which such Old Note has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iv) the date on which such
Old Note is distributed to the public pursuant to Rule 144 under the Securities
Act. Notwithstanding the foregoing, subject to the limitations contained in the
Registration Rights Agreement, at any time after Consummation (as defined in the
Registration Rights Agreement) of the Exchange Offer, the Company may allow the
Shelf Registration Statement to cease to be effective and usable if the
prospectus contained in the Shelf Registration Statement contains an untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading; provided that the period referred to in the
Registration Rights Agreement during which the Shelf Registration Statement is
required to be effective and usable will be extended by the number of days
during which such registration statement was not effective or usable pursuant to
the foregoing provisions.
The Registration Rights Agreement provides that (i) the Company will file
an Exchange Offer Registration Statement with the Commission on or prior to 60
days after the Closing Date, (ii) the Company will use commercially reasonable
efforts to have the Exchange Offer Registration Statement declared effective by
the Commission on or prior to 135 days after the date on which such Exchange
Offer Registration Statement is filed with the Commission (which 135-day period
shall be extended for a number of days equal to the number of business days, if
any, that the Commission is officially closed during such period), (iii) unless
the Exchange Offer would not be permitted by applicable law or Commission
policy, the Company will commence the Exchange Offer and use its commercially
reasonable efforts to issue on or prior to 25 business days after the date on
which the Exchange Offer Registration Statement was declared effective by the
Commission, New Notes in exchange for all Old Notes tendered prior thereto in
the Exchange Offer and (iv) if obligated to file the Shelf Registration
Statement, the Company will use its best efforts to file the Shelf Registration
Statement with the Commission on or prior to 60 days after such filing
obligation arises and to use commercially reasonable efforts to cause the Shelf
Registration Statement to be declared effective by the Commission on or prior to
135 days after such filing obligation arises. If (a) the Company fails to file
either of the Registration Statements required by the Registration Rights
Agreement on or before the date specified for such filing, (b) either of such
Registration Statements is not declared effective by the Commission on or prior
to the date specified for such effectiveness (the "Effectiveness Target Date"),
(c) the Company fails to consummate the Exchange Offer within 25 business days
of the Effectiveness Target Date with respect to the Exchange Offer Registration
Statement, or (d) subject to the last sentence of the preceding paragraph, the
Shelf Registration Statement or the Exchange Offer Registration Statement is
declared effective but thereafter ceases to be effective or usable (other than
as described in the last sentence of the preceding paragraph) in connection with
resales of Transfer Restricted Securities during the periods specified in the
Registration Rights Agreement (each such event referred to in clauses (a)
through (d) above a "Registration Default"), then, subject to the last sentence
of the preceding paragraph, the Company will pay Liquidated Damages to each
Holder of Transfer Restricted Securities affected thereby, with respect to the
first 90-day period immediately following the occurrence of such Registration
Default, in an amount equal to $0.05 per week per $1,000 in principal amount of
Notes constituting Transfer Restricted Securities held by such Holder. The
amount of the Liquidated Damages will increase by an additional $0.05 per week
per $1,000 in principal amount of Notes constituting Transfer Restricted
Securities with respect to each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum amount of Liquidated Damages of $0.50
per week per $1,000 in principal amount of Notes constituting Transfer
Restricted Securities. All accrued Liquidated Damages will be paid by the
Company in cash to persons entitled thereto on each Interest Payment Date to the
Global Note Holder (and any Holder of Certificated Securities who has given wire
transfer instructions to the Company prior to the Interest Payment Date) by wire
transfer of immediately available funds and to all other Holders of Certificated
Securities by mailing checks to their registered addresses. Following the cure
of all Registration Defaults, the accrual of Liquidated Damages will cease.
Holders of Old Notes will be required to make certain representations to
the Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in
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order to have their Old Notes included in the Shelf Registration Statement and
benefit from the provisions regarding Liquidated Damages set forth above.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is filed as an exhibit to the Company's most recent
Annual Report on Form 10-K.
Except as described below under "--Amendment, Supplement and Waiver", the
Old Notes and the New Notes will be considered collectively to be a single class
for all purposes under the Indenture, including, without limitation, waivers,
amendments, redemptions and repurchase offers, and for purposes of this
"Description of the New Notes" (except under this caption, "--Registration
Rights; Liquidated Damages") all reference herein to "Notes" shall be deemed to
refer collectively to the Old Notes and the New Notes, unless the context
otherwise requires.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver, (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the caption
"-- Repurchase at the Option of Holders"), (iii) reduce the rate of or change
the time for payment of interest or Liquidated Damages, if any, on any Note,
(iv) waive a Default or Event of Default, in each case in the payment of
principal of or premium or Liquidated Damages, if any, or interest on the Notes
(except a rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration), (v) make any Note payable in
money other than that stated in the Notes, (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults (other than to
add sections of the Indenture or the Notes which are subject thereto) or the
rights of Holders of Notes to receive payments of principal of or premium or
Liquidated Damages, if any, or interest on the Notes, (vii) waive a redemption
payment with respect to any Note (other than a payment required by one of the
covenants described above under the caption "--Repurchase at the Option of
Holders") or (viii) make any change in the foregoing amendment and waiver
provisions. In addition, any amendment to the provisions of the Article of the
Indenture relating to subordination will require the consent of the Holders of
at least 66 2/3% in aggregate principal amount of the Notes then outstanding if
such amendment would adversely affect the rights of Holders of Notes.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's obligations to Holders of Notes in the case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, or to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
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CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Trustee is a lender under the Senior Credit Facility.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture and
the Registration Rights Agreement without charge by writing to Metal Management,
Inc., 500 North Dearborn St., Suite 405, Chicago, Illinois 60610; Attention:
Chief Financial Officer.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured at
the time of acquisition thereof by a Lien encumbering any asset acquired by such
specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Asset Sale" means:
(i) the sale, conveyance, transfer or other disposition (whether in
a single transaction or a series of related transactions) of property or
assets (including by way of a sale and leaseback) of the Company or any
Restricted Subsidiary to any Person other than the Company or any
Restricted Subsidiary of the Company (each referred to in this definition
as a "disposition") or
(ii) the issuance or sale of Equity Interests of any Restricted
Subsidiary (other than directors' qualifying shares) to any Person other
than the Company or any Restricted Subsidiary of the Company
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(whether in a single transaction or a series of related transactions), in
each case set forth in these clauses (i) and (ii), other than:
(a) a disposition of Cash Equivalents or tangible personal property
(including obsolete or redundant equipment) in the ordinary course of
business of the Company or the applicable Restricted Subsidiary;
(b) the disposition of all or substantially all of the assets of the
Company in a manner permitted pursuant to the provisions described above
under the caption "--Merger, Consolidation or Sale of Assets" or any
disposition that constitutes a Change of Control pursuant to the Indenture;
(c) any disposition that is a Restricted Payment or Permitted
Investment that is not prohibited under the covenant described above under
the caption "--Restricted Payments"; and
(d) any disposition, or related series of dispositions, of assets
with an aggregate Fair Market Value of less than $1.5 million.
"Attributable Debt" means, in respect of a sale and leaseback transaction,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet of the lessee
thereof in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person (excluding "earn-out" payments
pursuant to the acquisition agreements of the Company or any Subsidiary).
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than one
year from the date of acquisition, (iii) certificates of deposit and time
deposits with maturities of one year or less from the date of acquisition,
bankers' acceptances with maturities not exceeding one year and overnight bank
deposits, in each case with any commercial bank having combined capital and
surplus in excess of $200.0 million (or the foreign currency equivalent thereof)
and whose short-term commercial paper rating, or that of its parent holding
company, is at least "A-1" or the equivalent by Standard & Poor's Corporation
and at least "Prime-1" or the equivalent by Moody's Investors Service, Inc.,
(iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications specified
in clause (iii) above, (v) shares of money market or similar funds which comply
with Rule 2a-7 or any successor rule of the Commission and (vi) commercial paper
rated A-1 or higher by Standard & Poor's Corporation or P-1 by Moody's Investors
Service, Inc. and in each case maturing within one year after the date of
acquisition.
"Change of Control " means the occurrence of any of the following: (i) the
sale, lease or transfer, in one or a series of related transactions (other than
by merger or consolidation), of all or substantially all of the assets of the
Company and its Restricted Subsidiaries, taken as a whole, to any "person" (as
such term is used in Section 13(d)(3) of the Exchange Act); (ii) the adoption of
a plan relating to the liquidation or dissolution of the Company; (iii) (A) the
acquisition by any Person or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act), other than the Principals, of a direct or
indirect interest in more than 35% of
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the voting power of the Voting Stock of the Company by way of acquisition,
merger or consolidation or otherwise and (B) the Principals beneficially owning,
directly or indirectly, a lesser percentage of the voting power of the Voting
Stock of the Company than such Person or group and the Principals not having the
right or ability by voting power, contract or otherwise to elect or designate
for election a majority of the Board of Directors of the Company; (iv) a
majority of the members of the Board of Directors of the Company ceasing to be
Continuing Directors; or (v) any Person or group effecting a "Rule 13e-3
transaction" (within the meaning of Rule 13e-3 under the Exchange Act) with
respect to the Company.
"Company Preferred Stock" means the $25 million in aggregate liquidation
preference of the Series A Convertible Preferred Stock and the $20 million in
aggregate liquidation preference of the Series B Convertible Preferred Stock of
the Company outstanding on the date of the Indenture.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary or non-recurring loss plus any net loss realized, in
each case, in connection with all Asset Sales (to the extent such losses were
deducted in computing such Consolidated Net Income), plus (ii) provision for
taxes based on income or profits of such Person and its Restricted Subsidiaries
for such period, to the extent that such provision for taxes was deducted in
computing such Consolidated Net Income, plus (iii) consolidated interest expense
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued and whether or not capitalized (including, without limitation,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
any Consolidated Non-Cash Charges that were deducted in computing such
Consolidated Net Income, less (v) any non-cash items increasing Consolidated Net
Income for such period and plus (vi) any cash dividends received by the Company
or any of its Restricted Subsidiaries which are paid by an Unrestricted
Subsidiary.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
stockholders, (iii) the cumulative effect of a change in accounting principles
shall be excluded and (iv) the Net Income of any Unrestricted Subsidiary shall
be excluded, whether or not distributed to the Company or one of its
Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the total of the following amounts of the Person and its Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP as of
such date: (i) the par or stated value of all outstanding Capital Stock of the
Person plus (ii) paid-in capital or capital surplus relating to such Capital
Stock plus (iii) any retained earnings or earned surplus less (A) any
accumulated deficit and (B) any amounts attributable to Disqualified Stock.
"Consolidated Non-Cash Charges" means, with respect to any Person, for any
period, the aggregate depreciation and amortization (including (a) amortization
of goodwill, (b) any incremental increase in amortization of account inventory
resulting from write-ups of such inventory in connection with the purchase
accounting treatment of an acquisition and (c) amortization of other intangibles
and other noncash charges or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Restricted Subsidiaries for such
period, in each case, determined on a consolidated basis in accordance with
GAAP.
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"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with, or whose election to such Board of
Directors was approved by, the affirmative vote of a majority of the Continuing
Directors who were members of such Board of Directors at the time of such
nomination or election.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Designated Senior Debt" means so long as the Senior Bank Debt is
outstanding, the Senior Bank Debt.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the Holder thereof, in whole or in part, on or prior to the
date that is 91 days after the date on which the Notes mature.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries (other than Indebtedness under the Senior Credit
Facility) in existence on the date of the Indenture, until such amounts are
repaid.
"Fair Market Value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, in cash,
between an informed and willing seller and an informed and willing and able
buyer, neither of whom is under undue pressure or compulsion to complete the
transaction. Fair Market Value shall be determined by the Board of Directors of
the Company acting reasonably and in good faith and, in the case of Fair Market
Value that exceeds $5 million, shall be evidenced by a Board Resolution
delivered to the Trustee; provided, however, that, in the case of any
determination of Fair Market Value for purposes of the covenant described under
the caption "--Restricted Payments", if the aggregate Fair Market Value could be
reasonably likely to exceed $10.0 million, the Fair Market Value shall be
determined by an accounting, appraisal or investment banking firm of nationally
recognized standing that is, in the reasonable and good faith judgment of the
Board of Directors of the Company, qualified to perform the task for which such
firm has been engaged.
"Fixed Charges" means, with respect to any Person for any period, the sum
of (i) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization of original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations, imputed
interest with respect to Attributable Debt, commissions, discounts and other
fees and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations, but
excluding amortization of deferred financing costs) and (ii) the consolidated
interest expense of such Person and its Restricted Subsidiaries that was
capitalized during such period and (iii) any interest expense on Indebtedness of
another Person that is Guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or one of its
Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon)
and (iv) all cash dividend payments (and non-cash dividend payments in the case
of a Person that is a Restricted Subsidiary) on any series of Preferred Stock of
such Person, in each case, on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees or
redeems any Indebtedness (other than revolving credit borrowings) or issues
Preferred Stock subsequent to the commencement of the period for which the Fixed
Charge Coverage Ratio is being calculated but prior to the date on which the
event for which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to
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such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of Preferred Stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been consummated by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and Consolidated
Cash Flow and Fixed Charges for such reference period shall be calculated giving
pro forma effect (excluding any pro forma increase in revenues other than
historical revenue of the acquired business, but including any pro forma expense
and cost reductions, in each case calculated on a basis consistent with
Regulation S-X under the Securities Act) to such acquisition and related
financing transactions and (ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, calculated giving pro
forma effect to such disposition, shall be excluded, and (iii) the Fixed Charges
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, but only to the extent that the obligations giving rise to such Fixed
Charges will not be obligations of the referent Person or any of its Restricted
Subsidiaries following the Calculation Date.
"Foreign Subsidiaries" means any Subsidiary of the Company incorporated or
organized under the laws of a jurisdiction outside of the United States of
America and which, individually or together with all other such Subsidiaries
outside of the United States of America, represents less than 10% of the assets
or revenues of the Company and its Restricted Subsidiaries for any period, on a
consolidated basis and determined in accordance with GAAP.
"GAAP " means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the net
obligations of such Person under (i) currency exchange or interest rate swap
agreements, currency exchange or interest rate cap agreements and currency
exchange or interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in currency
exchange or interest rates or commodity prices.
"Holder" means a holder of any of the Notes.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the maximum fixed redemption or
repurchase price of Redeemable Interests of such Person at the time of
determination or the balance deferred and unpaid of the purchase price of any
property (other than contingent or "earnout" payment obligations) or
representing any net Hedging Obligations, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP as well as all indebtedness of others secured by a Lien on
any asset of such Person (whether or not such indebtedness is assumed by such
Person) and, to the extent not otherwise included, the Guarantee by such Person
of any indebtedness of any other Person.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other
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obligations), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP. If the Company or any Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Subsidiary of the Company, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the Fair Market Value of the Equity Interests of such Subsidiary not
sold or disposed of. The amount of any Investment shall be the original cost of
such Investment plus the cost of all additions thereto, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Loan Reductions" means permanent commitment reductions with respect to
revolving loans under the Senior Credit Facility (or any Permitted Refinancing
Indebtedness relating thereto) that have been made since the date of the
Indenture.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and brokerage and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness (other than Senior Bank Debt) in connection with
such Asset Sale, distributions and payments to minority interest holders in
connection with such Asset Sale and any reserve for adjustment in respect of the
sale price of such asset or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
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"Officer's Certificate" means a certificate signed on behalf of the Company
by the principal executive officer, the principal financial officer, the
treasurer or the principal accounting officer of the Company that meets the
requirements set forth in the Indenture.
"Pari Passu Indebtedness" means Indebtedness that ranks pari passu in right
of payment to the Notes.
"Permitted Investments" means (a) any Investment in the Company or in a
Restricted Subsidiary of the Company; (b) any Investment in cash and Cash
Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment (A) such Person
becomes a Restricted Subsidiary of the Company or (B) such Person, in one
transaction or a series of related transactions, is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of the
Company; (d) any Restricted Investment made as a result of the receipt of
consideration not constituting cash or Cash Equivalents from an Asset Sale that
was made pursuant to and in compliance with the covenant described above under
the caption "--Repurchase at the Option of Holders--Asset Sales"; (e) any
Investment existing on the date of the Indenture, and any renewals or
replacements thereof; (f) any Investment by Restricted Subsidiaries in other
Restricted Subsidiaries and Investments by Subsidiaries that are not Restricted
Subsidiaries in other Subsidiaries that are not Restricted Subsidiaries; (g) any
Investment acquired or made by the Company or any of its Restricted Subsidiaries
(A) in exchange for any other Investment or receivable held by the Company or
any such Restricted Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the issuer of such
other Investment or receivable or (B) as a result of a foreclosure by the
Company or any of its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any secured Investment in
default; (h) Hedging Obligations; (i) any acquisition of assets, Equity
Interests or other securities by the Company for consideration consisting of
common Equity Interests of the Company; (j) loans and advances to officers,
directors and employees for business-related travel expenses, moving expenses
and other similar expenses, in each case, incurred in the ordinary course of
business; (k) Investments the payment for which consists exclusively of Equity
Interests (exclusive of Disqualified Stock) of the Company; (l) repurchases of
Notes by the Company or any Restricted Subsidiary in open market purchase
transactions; (m) Investments not to exceed $15 million in the aggregate
outstanding at any time in Unrestricted Subsidiaries or Permitted Joint
Ventures; (n) any Investment by the Company or any Restricted Subsidiary in any
of its suppliers in the form of "take or pay" or "requirements" contracts
entered into by the Company or such Restricted Subsidiary in the ordinary course
of business; and (o) the making of other Investments not to exceed $15 million
in the aggregate outstanding at any time.
"Permitted Joint Venture" means, with respect to any Person, any
corporation, partnership, limited liability company or other business entity of
which at least 25% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof).
"Permitted Junior Securities" means equity securities of the Company or
debt securities of the Company that are subordinated in right of payment to all
Senior Debt and all securities issued in exchange for Senior Debt that may at
the time be outstanding, to substantially the same extent as, or to a greater
extent than, the Notes.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of any premium required
to be paid in connection therewith and plus reasonable expenses incurred in
connection therewith); (ii) such Permitted Refinancing Indebtedness has a final
maturity date no earlier than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the
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Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date no earlier
than the final maturity date of, and is subordinated in right of payment to, the
Notes on terms at least as favorable to the Holders of Notes as those contained
in the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred
either by the Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock", as to any Person, means any Equity Interest with
preferential right of payment of dividends or upon liquidation, dissolution or
winding up over Equity Interests of any other class of such Person.
"Principal Business" means any business in the metals industry, and
businesses reasonably related thereto.
"Principals" mean, collectively, (i) Samstock, L.L.C. and its affiliates
and successors and (ii) T. Benjamin Jennings, Gerard M. Jacobs, Albert A. Cozzi,
Frank J. Cozzi and Gregory P. Cozzi, and the respective spouses, parents and
lineal descendants (by blood, adoption or marriage) of the foregoing, trusts the
sole beneficiaries of which (other than contingent beneficiaries) are any of the
foregoing, or corporations, partnerships or limited liability companies the sole
shareholders, sole partners or sole members of which are any of the foregoing.
"Pro Forma Basis" means, with respect to any additional Indebtedness
incurred or Disqualified Stock issued, as the case may be, the Fixed Charge
Coverage Ratio for the Company for the most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date of such occurrence, as adjusted to reflect the incurrence of
such additional Indebtedness or the issuance of such Disqualified Stock, as the
case may be, and the application of the net proceeds therefrom, as of the
beginning of such four-quarter period.
"Purchase Money Indebtedness" means Indebtedness the net proceeds of which
are used for the purchase of property or assets acquired in the ordinary course
of business by the Person incurring such Indebtedness.
"Redeemable Interest" of any Person means any equity security of or other
ownership interest in such Person that by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable) or
otherwise (including upon the occurrence of an event) matures or is required to
be redeemed (pursuant to any sinking fund obligation or otherwise) or is
convertible into or exchangeable for Indebtedness or is redeemable at the option
of the holder thereof, in whole or in part, at any time prior to the final
stated maturity of the Notes.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of such Person
that is not (i) an Unrestricted Subsidiary or (ii) a direct or indirect
Subsidiary of an Unrestricted Subsidiary; provided, however, that upon the
occurrence of any Unrestricted Subsidiary ceasing to be an Unrestricted
Subsidiary, such Subsidiary shall be included in the definition of Restricted
Subsidiary.
"Senior Bank Debt" means all Obligations under or in respect of the Senior
Credit Facility, together with any refunding, refinancing or replacement, in
whole or part, of such Indebtedness.
"Senior Credit Facility" means that certain credit facility dated as of
March 31, 1998, by and among the Company, certain Subsidiaries of the Company,
BT Commercial Corporation, as agent for the lenders, and certain commercial
lending institutions party thereto, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended
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(including any amendment and restatement thereof), modified, renewed, refunded,
replaced or refinanced from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder (provided that such
increase in borrowings is permitted by the covenant described under the caption
"--Incurrence of Indebtedness and Issuance of Disqualified Stock") or adding
Subsidiaries of the Company as additional borrowers or guarantors thereunder)
all or any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.
"Senior Debt" means (i) the Senior Bank Debt and (ii) any other
Indebtedness permitted to be incurred by the Company or a Guarantor under the
terms of the Indenture, unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or subordinated in right
of payment to the Notes (including interest after the filing of any petition in
bankruptcy or insolvency proceeding at the rate specified in the documents
relating to the applicable Senior Debt). Notwithstanding anything to the
contrary in the foregoing, Senior Debt will not include (1) any liability for
federal, state, local or other taxes owed or owing by the Company, (2) any
Indebtedness of the Company to any of its Restricted Subsidiaries or other
Affiliates, (3) any trade payables, (4) that portion of any Indebtedness that is
incurred in violation of the Indenture, (5) Indebtedness which, when incurred
and without respect to any election under Section 1111 (b) of the Title 11,
United States Code, is without recourse to the Company, (6) Indebtedness
evidenced by the Notes and (7) Capital Stock.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the date
hereof.
"Significant Subsidiary Guarantee" means the Subsidiary Guarantee of a
Significant Subsidiary.
"Subordinated Indebtedness" means any Indebtedness of the Company or any of
its Restricted Subsidiaries which is expressly by its terms subordinated in
right of payment to any other Indebtedness.
"Subsidiary" means, with respect to any Person, (i) any corporation,
limited liability company, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any combination thereof).
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution, which designation may only be made if such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; and (d) has not guaranteed
or otherwise directly or indirectly provided credit support for any Indebtedness
of the Company or any of its Restricted Subsidiaries. Any such designation by
the Board of Directors shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officer's Certificate certifying that such designation
complied with the foregoing conditions and was permitted by the covenant
described above under the caption "--Certain Covenants--Restricted Payments".
If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not
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permitted to be incurred as of such date under the covenant described above
under the caption "--Incurrence of Indebtedness and Issuance of Disqualified
Stock", the Company shall be in violation of such covenant). The Board of
Directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided that such designation shall be deemed to
be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of
any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted to be
incurred by the covenant described above under the caption "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Disqualified Stock", and
(ii) no Default or Event of Default would be in existence following such
designation.
"Voting Stock" means, with respect to any Person, any class or series of
capital stock of such Person that is ordinarily entitled to vote in the election
of directors thereof at a meeting of stockholders called for such purpose,
without the occurrence of any additional event or contingency.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" is any Wholly Owned Subsidiary that is
a Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
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CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
The following discussion is a summary of certain United States federal
income tax considerations relevant to the purchase, ownership and disposition of
the New Notes by the beneficial owners thereof ("Holders"). The discussion is
limited to Holders of New Notes exchanged for Old Notes of which such Holders
were the initial Holders and does not address the tax consequences to subsequent
purchasers of New Notes. This summary does not purport to be a complete analysis
of all the potential federal income and estate tax effects relating to the
purchase, ownership and disposition of the New Notes. There can be no assurance
that the Internal Revenue Service (the "Service") will take a similar view of
such consequences. Further, the discussion does not address all aspects of
taxation that might be relevant to particular Holders in light of their
individual circumstances (including the effect of any state, local, non-United
States or other tax laws) or to certain types of Holders (including dealers in
securities, insurance companies, financial institutions and tax-exempt entities)
subject to special treatment under United States federal tax law. The discussion
below assumes that the New Notes are held as capital assets.
The discussion of the United States federal income tax consequences set
forth below is based upon provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), regulations thereunder, judicial decisions, and
administrative interpretations, all in effect as of the date hereof, all of
which are subject to change at any time, and any such change may be applied
retroactively. Because individual circumstances may differ, each prospective
purchaser of the New Notes is strongly urged to consult its own tax advisor with
respect to its particular tax situation and the particular tax effects of any
state, local, non-United States, or other tax laws and possible changes in the
tax laws.
As used herein, the term "United States Holder" means a Holder of a New
Note who or which is for United States federal income tax purposes either (i) a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in the United States or organized under the
laws of the United States or of any State thereof (including the District of
Columbia), (iii) an estate the income of which is subject to United States
federal income taxation regardless of its source, or (iv) a trust described in
Section 7701(a)(30) of the Code (taking into account changes thereto and
associated effective dates, elections and transition rules). The term "United
States Holder" also includes certain former citizens or residents of the United
States whose income and gain on the New Notes will be subject to United States
taxation. As used herein, the term "Non-United States Holder" means a Holder of
a New Note who or which is not a United States Holder.
TAX CONSEQUENCES TO UNITED STATES HOLDERS
Consequences of the Exchange Offer to Exchanging and Nonexchanging Holders
The exchange of an Old Note for a New Note pursuant to the Exchange Offer
will not be taxable to an exchanging Holder for federal income tax purposes. As
a result (i) an exchanging Holder will not recognize any gain or loss on the
exchange; (ii) the holding period for the New Note will include the holding
period for the Old Note; (iii) the basis of the New Note will be the same as the
basis for the Old Note; and (iv) any original issue discount ("OID") on the New
Note will be the same as on the Old Note.
The Exchange Offer will result in no federal income tax consequences to a
nonexchanging holder of Old Notes.
The treatment of interest described below with respect to the New Notes is
based in part upon the Company's determination that, as of the date of issuance
of the Old Notes, the possibility that additional interest would be paid to
Holders pursuant to a Registration Default was remote, in which case the
possibility of such payment should not, as of the issue date, have caused the
Old Notes to be treated as having been issued with contingent interest under
certain United States Treasury Regulations (the "Contingent Interest
Regulations") and, therefore, the New Notes should not be subject to the
Contingent Interest Regulations. The Service may take a different position,
which could affect the timing and character of interest income reported by
United States Holders. The Company's determination that the possibility of such
additional
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payments was remote for these purposes is binding on a United States Holder,
unless such Holder discloses in the proper manner to the Service that it is
taking a different position.
Payments of Interest
Interest paid on a New Note will generally be taxable to a United States
Holder as ordinary interest income at the time it accrues or is received in
accordance with the United States Holder's method of accounting for United
States federal income tax purposes.
Sale, Exchange, Redemption or Retirement of Notes
Upon the sale, exchange, redemption or retirement of a New Note, a United
States Holder will recognize taxable gain or loss equal to the difference
between the amount realized on the sale, exchange, redemption or retirement (not
including any amount attributable to accrued but unpaid interest) and such
Holder's adjusted tax basis in the New Note. To the extent attributable to
accrued but unpaid interest, the amount recognized by the United States Holder
will be treated as a payment of interest. See "--Tax Consequences to United
States Holders--Payments of Interest". A United States Holder's adjusted tax
basis in a New Note will equal the cost of the Old Note to such Holder, reduced
by any principal payments received by such Holder.
Gain or loss recognized on the sale, exchange, redemption or retirement of
a Note by a United States Holder generally will be capital gain or loss. Capital
gain realized by a non-corporate taxpayer on the disposition of a capital asset
(including a New Note) held for more than one year generally is taxed at a
maximum rate of 20%. Capital gain on the disposition of an asset (including a
New Note) by non-corporate taxpayers held for one year or less continues to be
taxed at the rates applicable to ordinary income (i.e., up to 39.6%). The
distinction between capital gain or loss and ordinary income or loss is also
relevant for purposes of, among other things, limitations on the deductibility
of capital losses.
A Holder attempting to sell a New Note in the secondary market should be
aware that a subsequent Holder who purchases a New Note at a discount may be
subject to the "market discount" rules of the Code. A subsequent Holder who
purchases a New Note at a premium may elect to amortize and deduct the premium
over the remaining term of the New Note in accordance with rules set forth in
Section 171 of the Code.
TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) payments of principal and interest on the New Notes by the Company or
any paying agent to a Non-United States Holder, as defined above, will
not be subject to withholding of United States federal income tax,
provided that, in the case of interest, (i) such Non-United States
Holder does not own, actually or constructively, 10 percent or more of
the total combined voting power of all classes of stock of the Company
entitled to vote, (ii) such Non-United States Holder is not, for United
States federal income tax purposes, a controlled foreign corporation
related, directly or indirectly, to the Company through stock ownership,
(iii) such Non-United States Holder is not a bank receiving interest
described in Section 881(c)(3)(A) of the Code and (iv) the certification
requirements under Section 871(h) or Section 881(c) of the Code and
Treasury regulations thereunder (summarized below) are met;
(b) a Non-United States Holder will not be subject to United States
federal income tax on gain recognized on the sale, exchange or other
disposition of a New Note, unless (i) such Non-United States Holder is a
non-resident alien individual who is present in the United States for
183 days or more in the taxable year of sale, exchange or other
disposition, and certain other conditions are met or (ii) such gain is
effectively connected with the conduct by such Holder of a trade or
business in the United States; and
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(c) a New Note held by an individual who is not a citizen or resident of
the United States (as defined for United States federal estate tax
purposes) at the time of his death will not be subject to United States
federal estate tax as a result of such individual's death, provided
that, at the time of such individual's death, (i) the individual does
not own, actually or constructively, 10 percent or more of the total
combined voting power of all classes of stock of the Company entitled to
vote and (ii) payments with respect to such New Note, if received at the
time of the individual's death, would not have been effectively
connected to the conduct by such individual of a trade or business in
the United States.
Certification Requirements
Sections 871(h) and 881(c) of the Code and Treasury Regulations relating
thereto require that, in order to obtain the exemption from withholding tax
described in paragraph (a) above, either (i) the beneficial owner of a New Note
must certify, under penalties of perjury, to the Company or paying agent, as the
case may be, that such owner is a Non-United States Holder and must provide such
owner's name and address or (ii) a securities clearing organization, bank or
other financial institution that holds customers securities in the ordinary
course of its trade or business (a "Financial Institution") and holds the New
Note on behalf of the beneficial owners thereof must certify, under penalties of
perjury, to the Company or paying agent, as the case may be, that such
certificate has been received from the beneficial owner by it or by a Financial
Institution between it and the beneficial owner and must furnish the payor with
a copy thereof. A certificate described in this paragraph is effective only with
respect to payments of interest made to the certifying Non-United States Holder
after issuance of the certificate in the calendar year of its issuance and the
two immediately succeeding calendar years. Such requirement will be fulfilled if
the beneficial owner of a New Note certifies on Internal Revenue Service Form
W-8, under penalties of perjury, that it is a Non-United States Holder and
provides its name and address, and if any Financial Institution holding the New
Note on behalf of the beneficial owner files a statement with the withholding
agent to the effect that it has received such a statement from the beneficial
owner (and furnishes the withholding agent with a copy thereof).
The United States Treasury Department adopted new Regulations published in
the Federal Register on October 14, 1997 (the "New Regulations") which affect
the United States taxation of Non-United States Holders with respect to
withholding and backup withholding. As promulgated, the New Regulations are
generally effective, subject to certain transition rules described below, for
payments after December 31, 1998, regardless of the issue date of the instrument
with respect to which such payments are made. The Service recently announced its
intention to amend the New Regulations to extend the effective date to those
payments made after December 31, 1999, subject to certain transition rules. The
discussion under this heading and under "Information Reporting and Backup
Withholding" below, is not intended to be a complete discussion of the
provisions of the New Regulations or the recent Service announcement, and
Holders of the New Notes are urged to consult their tax advisors concerning the
tax consequences of their acquiring, holding and disposing of the New Notes in
light of the New Regulations.
The New Regulations provide documentation procedures designed to simplify
compliance by withholding agents. The New Regulations generally do not affect
the documentation rules described above, but add other certification options.
Under one such option, a withholding agent will be allowed to rely on an
intermediary withholding certificate furnished by a "qualified intermediary" (as
defined below) on behalf of one or more beneficial owners (or other
intermediaries) without the withholding agent having to obtain the beneficial
owner certificate described above. "Qualified intermediaries" include: (i)
foreign financial institutions or foreign clearing organizations (other than a
United States branch or United States office of such institution or
organization) or (ii) foreign branches or offices of United States financial
institutions or foreign branches or offices of United States clearing
organizations, which, as to both (i) and (ii), have entered into withholding
agreements with the Service. In addition to certain other requirements,
qualified intermediaries must obtain withholding certificates, such as revised
Internal Revenue Service Form W-8 (see below), from each beneficial owner. Under
another option, an authorized foreign agent of a United States withholding agent
will be permitted to act on behalf of the United States withholding agent,
provided certain conditions are met.
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For purposes of the certification requirements, the New Regulations
generally treat as the beneficial owners of payments on a New Note those persons
that, under United States tax principles, are the taxpayers with respect to such
payments, rather than persons such as nominees or agents legally entitled to
such payments. In the case of payments to an entity classified as a foreign
partnership under United States tax principles, the partners, rather than the
partnership, generally will be required to provide the required certifications
to qualify for the withholding exemption described above. A payment to a United
States partnership, however, is treated for these purposes as payment to a
United States payee, even if the partnership has one or more foreign partners.
The New Regulations provide certain presumptions with respect to withholding for
Holders not furnishing the required certifications to qualify for the
withholding exemption described above. In addition, the New Regulations will
replace a number of current tax certification forms (including Internal Revenue
Service Form W-8, Form 1001 (treaty exemptions) and possibly Form 4224
(discussed below) with a single, revised Internal Revenue Service Form W-8
(which, in certain circumstances, will require information in addition to that
previously required). Under the New Regulations, this Internal Revenue Service
Form W-8 will remain valid until the last day of the third calendar year
following the year in which the certificate is signed. The New Regulations
contain detailed rules, which might be changed in light of the recent
announcement by the Service that the effective date will be postponed, governing
tax certifications during the transition period prior to and immediately
following the effectiveness of the New Regulations.
United States Trade or Business
If a Non-United States Holder is engaged in a trade or business in the
United States, and if interest on the New Note, or gain recognized on the sale,
exchange or other disposition of the New Note, is effectively connected with the
conduct of such trade or business, the Non-United States Holder, although exempt
from withholding of United States income tax, will generally be subject to
United States income tax on such interest or gain in the same manner as if it
were a United States Holder. See "--Tax Consequences to United States Holders".
In lieu of the certificates described above, such a Non-United States Holder
will be required to provide the withholding agent a properly executed Internal
Revenue Service Form 4224 (Statement Claiming Exemption of Tax on Income
Effectively Connected with the Conduct of Business in the United States) (or
successor form) in order to claim an exemption from withholding. If such
Non-United States Holder is a foreign corporation, it may be subject to a branch
profits tax equal to 30% (or such lower rate provided by an applicable treaty)
of its effectively connected earnings and profits for the taxable year, subject
to certain adjustments. For purposes of the branch profits tax, interest on, and
any gain recognized on the sale, exchange or other disposition of, a New Note
will be included in the effectively connected earnings and profits of such
Non-United States Holder if such interest or gain is effectively connected with
the conduct by the Non-United States Holder of a trade or business in the United
States.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Under current United States federal income tax law, a 31% backup
withholding tax requirement applies to certain payments of interest on, and the
proceeds of a sale, exchange or redemption of, the New Notes. In addition,
certain persons making such payments are required to submit information returns
(i.e., Internal Revenue Service Forms 1099) to the Service with regard to those
payments.
Backup withholding will generally not apply with respect to payments made
to certain "exempt recipients" such as corporations (within the meaning of
Section 7701(a) of the Code) or certain tax-exempt entities. In the case of a
non-corporate United States Holder, backup withholding generally will apply only
if such Holder (i) fails to furnish to the payor in the manner required its
Taxpayer Identification Number ("TIN") which, for an individual, would be his
Social Security number, (ii) furnishes an incorrect TIN and the payor is so
notified by the Service, (iii) is notified by the Service that it has failed to
properly report payments of interest and dividends and the payor is so notified
by the Service or (iv) under certain circumstances, fails to certify, under
penalties of perjury, that it has furnished a correct TIN and has not been
notified by the Service that it is subject to backup withholding for failure to
report interest or dividend payments.
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In the case of a Non-United States Holder, under current United States
federal income tax law, information reporting on Internal Revenue Service Form
1099 (including Internal Revenue Service Form 1099B) and backup withholding will
not apply to payments of principal or interest made by the Company or any paying
agent thereof on a New Note if such Holder has provided the required
certification on Internal Revenue Service Form W-8 (see "--Tax Consequences to
Non-United States Holders") under penalties of perjury that it is not a United
States Holder or has otherwise established an exemption, provided in each case
that the Company or such paying agent, as the case may be, does not have actual
knowledge that the payee is a United States Holder. However, interest on a New
Note beneficially owned by a Non-United States Holder will be required to be
reported annually on Internal Revenue Service Form 1042S. If a Non-United States
Holder does not provide the required certification, such Holder may nevertheless
avoid backup withholding or information reporting in the circumstances described
below, but such Holder might be subject to withholding of United States income
tax as described under "--Tax Consequences to Non-United States Holders".
Under current United States federal income tax laws, if payments of
principal or interest on a New Note are made to or through a foreign office of a
custodian, nominee, broker or other agent acting on behalf of a beneficial owner
of a New Note, such custodian, nominee, broker or other agent will not be
required to apply backup withholding to such payments made to such beneficial
owner and generally will not be subject to information reporting requirements.
However, if such custodian, nominee, broker or other agent is a United States
person for United States federal income tax purposes, a controlled foreign
corporation for United States federal income tax purposes, or a foreign person
50% or more of whose gross income is effectively connected with the conduct of a
United States trade or business for a specified three-year period, such
custodian, nominee, broker or other agent may be subject to certain information
reporting requirements with respect to such payments unless it has in its
records documentary evidence that the beneficial owner is a Non-United States
Holder and certain conditions are met or the beneficial owner otherwise
establishes an exemption.
Under current United States federal income tax law, payments on the sale,
exchange, redemption, retirement or other disposition of a New Note made to or
through a foreign office of a broker generally will not be subject to backup
withholding and generally will not be subject to information reporting
requirements. Such payments, however, will be subject to information reporting
if the broker is a United States person for United States federal income tax
purposes, a controlled foreign corporation for United States federal income tax
purposes, or a foreign person 50% or more of whose gross income is effectively
connected with the conduct of a United States trade or business for a specified
three-year period, unless the broker has in its records documentary evidence
that the beneficial owner is a Non-United States Holder and certain other
conditions are met, or the beneficial owner otherwise establishes an exemption.
Such payments made to or through the United States office of a broker will be
subject to backup withholding and information reporting unless the Non-United
States Holder certifies, under penalties of perjury, that it is a Non-United
States Holder or otherwise establishes an exemption.
In general, the New Regulations do not significantly alter the substantive
backup withholding and information reporting requirements described above. As
under current law, backup withholding and information reporting will not apply
to (i) payments to a Non-United States Holder of principal and interest and (ii)
payments to a Non-United States Holder on the sale, exchange, redemption,
retirement or other disposition of a New Note, in each case if such Non-United
States Holder provides the required certification to establish an exemption from
the withholding of United States federal income tax or otherwise establishes an
exemption. Similarly, even in the absence of a Non-United States Holder
providing such certification or otherwise establishing an exemption, unless the
payor has actual knowledge that the payee is a United States Holder, backup
withholding will not apply to (i) payments of interest made outside the United
States to certain offshore accounts and (ii) payments on the sale, exchange,
redemption, retirement or other disposition of a New Note effected outside the
United States. However, information reporting (but not backup withholding) will
apply to (i) payments of interest made by a payor outside the United States and
(ii) payments on the sale, exchange, redemption, retirement or other disposition
of a New Note effected outside the United States if payment is made by a broker
that is, for United States federal income tax purposes, (a) a United States
person, (b) a controlled foreign corporation, (c) a United States branch of a
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foreign bank or foreign insurance company, (d) a foreign partnership controlled
by United States persons or engaged in a United States trade or business or (e)
a foreign person 50% or more of whose gross income is effectively connected with
the conduct of a United States trade or business for a specified three year
period, in each case unless such payor or broker has in its records documentary
evidence that the beneficial owner is not a United States Holder and certain
other conditions are met or the beneficial owner otherwise establishes an
exemption (in which case, neither information reporting nor backup withholding
will apply). As noted above, the Service has announced that the New Regulations
will be amended to be effective generally for payments made after December 31,
1999, subject to certain transition rules.
Backup withholding tax is not an additional tax. Rather, any amounts
withheld from a payment to a person under backup withholding rules are allowed
as a refund or a credit against such person's United States federal income tax,
provided that the required information is furnished to the Service.
Holders should consult their tax advisors regarding the application of
information reporting and backup withholding in their particular situations, the
availability of an exemption therefrom, and the procedure for obtaining such an
exemption, if available.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH PROSPECTIVE HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR AS TO
THE PARTICULAR TAX CONSEQUENCES OF THE PROSPECTIVE HOLDER, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR NON-UNITED STATES INCOME TAX
LAWS AND ANY RECENT OR PROSPECTIVE CHANGES IN APPLICABLE TAX LAWS.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account ("Restricted
Broker-Dealers") pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Restricted Broker-Dealer in connection with resales of New Notes received
in exchange for Old Notes where such Old Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that it will make this Prospectus, as amended or supplemented, available to any
Restricted Broker-Dealer for use in connection with any such resale and
Restricted Broker-Dealers shall be authorized to deliver this Prospectus for a
period not exceeding 180 days after the Expiration Date.
The Company will not receive any proceeds from any sales of the New Notes
by Restricted Broker-Dealers. New Notes received by Restricted Broker-Dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time, in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Notes or a combination
of such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or at negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from such Restricted Broker-Dealer or the purchasers of any such New Notes. Any
broker-dealer that resells New Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a Restricted Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
The Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any Restricted Broker-Dealer that
reasonably requests such documents in the Letter of Transmittal. See "The
Exchange Offer."
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the
Notes offered hereby will be passed upon for the Company by Mayer, Brown &
Platt, Chicago, Illinois.
EXPERTS
The consolidated financial statements of the Company incorporated in this
Prospectus by reference to the Company's Form 8-K dated October 5, 1998, the
financial statements of Aerospace Metals, Inc incorporated by reference to the
Company's Form 8-K dated May 1, 1998, and the combined financial statements of
Naporano Iron & Metal Co. and Nimco Shredding Co. incorporated by reference to
the Company's Form 8-K dated July 1, 1998, have been so incorporated in reliance
on the reports of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
The consolidated balance sheets of Cozzi Iron & Metal, Inc. and
subsidiaries as of December 31, 1996 and 1995 and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1996 incorporated in this Prospectus by
reference from the Company's Proxy Statement, dated November 20, 1997, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
99
<PAGE> 113
- ------------------------------------------------------
- ------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES BY ANY PERSON IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................... iv
Incorporation of Certain Documents
by Reference............................. iv
Prospectus Summary......................... 1
Risk Factors............................... 14
The Exchange Offer......................... 26
Use of Proceeds............................ 36
Capitalization............................. 37
Selected Historical and Pro Forma
Financial Data........................... 38
Pro Forma Financial Data................... 43
The Company................................ 55
Certain Relationships and Related
Transactions............................. 56
Legal Proceedings.......................... 59
Description of the Senior Credit
Facility................................. 61
Description of the New Notes............... 62
Certain United States Federal Tax
Consequences............................. 93
Plan of Distribution....................... 99
Legal Matters.............................. 99
Experts.................................... 99
</TABLE>
------------------
UNTIL JANUARY 5, 1999 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
$180,000,000
METAL MANAGEMENT, INC.
10% SENIOR SUBORDINATED
NOTES DUE 2008
-----------------------
PROSPECTUS
-----------------------
OCTOBER 7, 1998
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 114
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to the provisions of Section 145(a) of the Delaware General
Corporation Law, the Company has the power to indemnify anyone made or
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of the Company) because such person is
or was a director or officer of the Company against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred in the defense or settlement of such action, suit, or
proceeding, provided that (i) such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the Company's best interest and
(ii) in the case of a criminal proceeding such person had no reasonable cause to
believe his conduct was unlawful.
With respect to an action or suit by or in the right of the Company to
procure a judgement in its favor, Section 145(b) of the Delaware General
Corporation Law provides that the Company shall have the power to indemnify
anyone who was, is, or is threatened to be made a party to a threatened,
pending, or completed action or suit brought by or in the right of the Company
to procure a judgment in its favor because such person is or was a director or
officer of the Company against expenses (including attorneys' fee) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit, provided that such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the Company's best interests,
except that no indemnification shall be made in a case in which such person
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall have determined upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses.
Indemnification as described above shall only be granted in a specific case
upon a determination that indemnification is proper under the circumstances
using the applicable standard of conduct which is made by (a) a majority of a
quorum of directors who were not parties to such proceeding, (b) independent
legal counsel in a written opinion of such quorum cannot be obtained or if a
quorum of disinterested directors so directs, or (c) the shareholders of the
Company.
Section 145(g) of the Delaware General Corporation Law permits the purchase
and maintenance of insurance to indemnify directors and officers against any
liability asserted against or incurred by them in any such capacity, whether or
not the Company itself would have the power to indemnify any such director or
officer against such liability. The Company has purchased this type of
insurance, has paid and intends to continue paying the premiums thereon.
The Company's Amended Certificate of Incorporation provides for the
indemnification of directors and officers of the Company to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law, as the same
may be amended or supplemented. The Certificate of Incorporation further
provides that the indemnification provided for therein shall not be exclusive of
any rights to which those indemnified may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors, or otherwise.
The Amended Certificate of Incorporation also contains a provision that
eliminates the personal liability of the Company's directors to the Company or
its shareholders of monetary damages for breach of fiduciary duty as a director.
The provision does not limit a director's liability for (i) breaches of duty of
loyalty to the Company or its shareholders, (ii) acts or omissions not in good
faith, involving intentional misconduct or involving knowing violations of law,
(iii) the payment of unlawful dividends or unlawful stock repurchases or
redemptions under Section 174 of the Delaware General Corporation Law, or (iv)
transactions in which the director received an improper personal benefit.
Depending on judicial interpretation, the provision may not affect liability for
violations of the federal securities laws.
II-1
<PAGE> 115
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The Company understands that the staff of the Securities and Exchange
Commission is of the opinion that statutory, charter and contractual provisions
as are described above have no effect on claims arising under the federal
securities laws. The Company is not aware of any material threatened or ongoing
litigation or proceeding that may result in a claim for such indemnification.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
The exhibits filed as part of this registration statement are as follows:
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<C> <S>
1.1 Purchase Agreement, dated May 8, 1998, among the Company,
the Guarantors, Goldman, Sachs & Co., BT Alex. Brown
Incorporated and Salomon Brothers Inc (incorporated by
reference to Exhibit 10.1 of the Company's report on Form
8-K dated May 13, 1998).
2.1 Purchase Agreement, dated as of March 10, 1997, between the
Company and BancBoston Ventures, Inc. (incorporated by
reference to Exhibit 2.1 of the Company's report on Form 8-K
dated May 2, 1997).
2.2 Purchase Agreement, dated as of January 17, 1997, among the
Company, P. Joseph Iron & Metal, Inc., the sole general
partner of Reserve Iron & Metal Limited Partnership, and
Paul D. Joseph, Steven Joseph and Scott Joseph (incorporated
by reference to Exhibit 2.2 of the Company's report on Form
8-K dated May 2, 1997).
2.3 First Amendment to Purchase Agreement, dated as of March 6,
1997, among the Company, P. Joseph Iron & Metal, Inc., the
sole general partner of Reserve Iron & Metal Limited
Partnership, and Paul D. Joseph, Steven Joseph and Scott
Joseph (incorporated by reference to Exhibit 2.3 of the
Company's report on Form 8-K dated May 2, 1997).
2.4 Second Amendment to Purchase Agreement, dated May 1, 1997,
among the Company, P. Joseph Iron & Metal, Inc., the sole
general partner of Reserve Iron & Metal Limited Partnership,
and Paul D. Joseph, Steven Joseph and Scott Joseph
(incorporated by reference to Exhibit 2.4 of the Company's
report on Form 8-K dated May 2, 1997).
2.5 Purchase Agreement, dated as of June 23, 1997, among the
Company, Isaac Corporation, Ferrex Trading Corporation,
Paulding Recycling, Inc. and Briquetting Corporation of
America (incorporated by reference to Exhibit 2.1 of the
Company's report on Form 8-K dated
June 23, 1997).
2.6 Agreement and Plan of Merger dated as of August 27, 1997, by
and among the Company, Proler Acquisition, Inc., Proler
Southwest Inc. and the Shareholders of Proler Southwest Inc.
(incorporated by reference to Exhibit 2.1 of the Company's
report on Form 8-K dated August 28, 1997).
</TABLE>
II-2
<PAGE> 116
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<C> <S>
2.7 Purchase Agreement for Membership Interests of Proler
Steelworks L.L.C., dated as of August 27, 1997, by and among
the Company, Proler Steelworks L.L.C. and the Members of
Proler Steelworks L.L.C. (incorporated by reference to
Exhibit 2.2 of the Company's report on Form 8-K dated August
28, 1997).
2.8 Agreement and Plan of Merger, dated May 16, 1997 (as
amended), among Cozzi Iron & Metal, Inc. and its
shareholders, the Company and CIM Acquisition, Co.
(incorporated by reference to Exhibit 2.1 of the Company's
report on Form 8-K dated December 1, 1997).
2.9 Agreement and Plan of Merger, dated December 11, 1997, by
and among the Company, HCS Acquisition, Inc., Houston
Compressed Steel Corp. and the Shareholders of Houston
Compressed Steel Corp. (incorporated by reference to Exhibit
4.11 of the Company's registration statement on Form S-3/A
dated January 13, 1998).
2.10 Asset Purchase Agreement, dated as of January 20, 1998,
between the Company, AMI Acquisition Co., Aerospace Metals,
Inc., Aerospace Parts Security, Inc., Suisman Titanium
Corporation, and Michael Suisman, the sole shareholder of
Aerospace Metals, Inc. and Aerospace Parts Security, Inc.
(incorporated by reference to Exhibit 2.1 of the Company's
report on Form 8-K dated January 20, 1998).
2.11 Stock Purchase Agreement, dated as of May 24, 1998, by and
among the Company, Joseph F. Naporano and Andrew J.
Naporano, Jr. (incorporated by reference to Exhibit 2.1 of
the Company's report on Form 8-K dated July 1, 1998).
4.1 Specimen of Stock Certificate (incorporated by reference to
Exhibit 4.1 of the Company's Annual Report on Form 10-K for
the year ended March 31, 1997).
4.2 1995 Stock Plan and Form of Option Agreement (incorporated
by reference to Exhibit 4.2 of the Company's Annual Report
on Form 10-K for the year ended March 31, 1997).
4.3 1996 Director Option Plan and Form of Option Agreement
(incorporated by reference to Exhibit 4.3 of the Company's
Annual Report on Form 10-K for the year ended March 31,
1997).
4.4 Registration Rights Agreement, dated as of June 23, 1997, by
and between the Company and the George A. Isaac, III Second
Revocable Trust (incorporated by reference to Exhibit 4.4 of
the Company's Annual Report on Form 10-K for the year ended
March 31, 1998).
4.5 Registration Rights Agreement, dated as of November 20,
1997, by and among the Company, Proprietary Convertible
Investment Group, Inc., and Capital Ventures International
(incorporated by reference to Exhibit 10.5 of the Company's
report on Form 8-K dated December 1, 1997).
4.6 Shelf Registration Rights Agreement, dated December 19,
1997, between the Company and Samstock, L.L.C. (incorporated
by reference to Exhibit 4.2 of the Company's report on Form
8-K dated December 18, 1997).
4.7 Amended and Restated Registration Rights Agreement, dated
December 19, 1997, among the Company, T. Benjamin Jennings,
Gerard M. Jacobs, Albert A. Cozzi, Frank J. Cozzi,
Gregory P. Cozzi and Samstock, L.L.C. (incorporated by
reference to Exhibit 4.3 of the Company's report on Form 8-K
dated December 18, 1997).
4.8 Registration Rights Agreement, dated December 18, 1997,
between the Registrant and Ronald I. Romano, Lolita A.
Romano, Ronald T. Romano and Ryan E. Romano (incorporated by
reference to Exhibit 4.4 of the Company's report on Form 8-K
dated January 2, 1998).
4.9 Registration Rights Agreement, dated January 20, 1998, by
and between the Company and Aerospace Metals, Inc.
(incorporated by reference to Exhibit 10.3 of the Company's
report on Form 8-K dated January 20, 1998).
4.10 Registration Rights Agreement, dated January 30, 1998, by
and between the Company and Newell Phoenix, L.L.C.
(incorporated by reference to Exhibit 4.5 of the Company's
registration statement on Form S-3 dated February 10, 1998).
</TABLE>
II-3
<PAGE> 117
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<C> <S>
4.11 Indenture, dated as of May 13, 1998, among the Company, the
Guarantors (as defined therein) and LaSalle National Bank,
as Trustee (incorporated by reference to Exhibit 10.2 of the
Company's report on Form 8-K dated May 13, 1998).
4.12 First Supplemental Indenture, dated as of May 31, 1998,
executed by R&P Holdings, Inc., Charles Bluestone Company
and R&P Real Estate, Inc., amending Indenture, dated as of
May 13, 1998, among the Company, the Guarantors and LaSalle
National Bank, as Trustee (incorporated by reference to
Exhibit 4.12 of the Company's Annual Report on Form 10-K for
the year ended March 31, 1998).
4.13 Second Supplemental Indenture, dated as of June 19, 1998,
executed by Metal Management Gulf Coast, Inc., amending
Indenture, dated as of May 13, 1998, among the Company, the
Guarantors and LaSalle National Bank, as Trustee
(incorporated by reference to Exhibit 4.13 of the Company's
Annual Report on Form 10-K for the year ended March 31,
1998).
4.14 * Third Supplemental Indenture, dated as of June 24, 1998,
executed by Newell Recycling West, Inc., amending Indenture,
dated as of May 13, 1998, among the Company, the Guarantors
and LaSalle National Bank, as Trustee.
4.15 * Fourth Supplemental Indenture, dated as of July 1, 1998,
executed by Naporano Iron & Metal Co. and NIMCO Shredding
Co., amending Indenture, dated as of May 13, 1998, among the
Company, the Guarantors and LaSalle National Bank, as
Trustee.
4.16 * Fifth Supplemental Indenture, dated as of July 1, 1998,
executed by Michael Schiavone & Sons, Inc. and Torrington
Scrap Company, amending Indenture, dated as of May 13, 1998,
among the Company, the Guarantors and LaSalle National Bank,
as Trustee.
4.17 ** Sixth Supplemental Indenture, dated as of July 7, 1998,
executed by Kimerling Acquisition Corp., amending Indenture,
dated as of May 13, 1998, among the Company, the Guarantors
and LaSalle National Bank, as Trustee.
4.18 ** Seventh Supplemental Indenture, dated as of July 9, 1998,
executed by Nicroloy Acquisition Corp., amending Indenture,
dated as of May 13, 1998, among the Company, the Guarantors
and LaSalle National Bank, as Trustee.
4.19 Exchange and Registration Rights Agreement, dated as of May
13, 1998, by and among the Company, the Guarantors, Goldman,
Sachs & Co., BT Alex. Brown Incorporated and Salomon
Brothers Inc (incorporated by reference to Exhibit 10.3 of
the Company's report on Form 8-K dated May 13, 1998).
4.20 Registration Rights Agreement, dated as of July 1, 1998, by
and among the Company, McDonald & Company Securities, Joseph
F. Naporano and Andrew J. Naporano, Jr. (incorporated by
reference to Exhibit 10.1 of the Company's report on Form
8-K dated July 1, 1998).
4.21 Declaration of Registration Rights, dated March 17, 1998, by
the Company for the benefit of Ian Albert, Betty Albert,
Eric Albert, Brian Albert, Lisa Albert and Alan Shumway
(incorporated by reference to Exhibit 4.15 of the Company's
registration statement on Form S-3 dated July 7, 1998).
4.22 Registration Rights Agreement, dated April 29, 1998, by and
between the Company and 138 Scrap, Inc. and Katrick, Inc.
(incorporated by reference to Exhibit 4.16 of the Company's
registration statement on Form S-3 dated July 7, 1998).
4.23 Registration Rights Agreement, dated as of June 24, 1998, by
and between the Company and G. Robert Triesch, III
(incorporated by reference to Exhibit 4.17 of the Company's
registration statement on Form S-3 dated July 7, 1998).
5.1 ** Form of Opinion of Mayer, Brown & Platt.
12.1 ** Statement re Computation of Ratio of Earnings to Fixed
Charges.
23.1 ** Consent of PricewaterhouseCoopers LLP.
</TABLE>
II-4
<PAGE> 118
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<C> <S>
23.2 ** Consent of Deloitte & Touche LLP.
23.3 Consent of Mayer, Brown & Platt (included in the opinion
filed as Exhibit 5.1).
24.1 Powers of Attorney (included as part of the signature page
hereof).
25.1 * Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of LaSalle National Bank.
27.1 * Financial Data Schedule.
99.1 * Form of Letter of Transmittal for the 10 1/4 Senior
Subordinated Notes due 2007.
99.2 * Guidelines for Certification of Taxpayer Identification
Numbers on Substitute Form W-9.
99.3 * Form of Notice of Guaranteed Delivery.
</TABLE>
- ------------------------
* Included with the Registration Statement filed on July 10, 1998.
** Included with this Amendment No. 1 to the Registration Statement.
(B) FINANCIAL STATEMENTS SCHEDULES
Schedules not listed above have been omitted because they are inapplicable
or the information required to be set forth therein is provided in the
Consolidated Financial Statements or the notes thereto.
ITEM 22. UNDERTAKINGS
Each of the undersigned registrants hereby undertakes:
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of a
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(a) Each of the undersigned registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent
no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
II-5
<PAGE> 119
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Each of the undersigned registrants hereby undertakes:
(1) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Item 4, 10(b), 11 or 13
of this form, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the
request.
(2) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the
registration statement when it became effective.
II-6
<PAGE> 120
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
METAL MANAGEMENT, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Chief Executive Officer
/s/ T. BENJAMIN JENNINGS
By:
--------------------------------------
T. Benjamin Jennings
Director, Chairman of the Board and
Chief Development Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GERARD M. JACOBS Director and Chief Executive Officer
- --------------------------------------------- (Principal Executive Officer)
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director, Chairman of the Board and
- --------------------------------------------- Chief Development Officer
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director, President and Chief Operating Officer
- ---------------------------------------------
Albert A. Cozzi
/s/ GEORGE A. ISAAC III Director and Executive Vice President
- ---------------------------------------------
George A. Isaac III
/s/ JOSEPH F. NAPORANO Director and Vice Chairman of the Board
- ---------------------------------------------
Joseph F. Naporano
/s/ FRANK J. COZZI Director and Vice President
- ---------------------------------------------
Frank J. Cozzi
/s/ GREGORY P. COZZI* Director
- ---------------------------------------------
Gregory P. Cozzi
/s/ ROD F. DAMMEYER* Director
- ---------------------------------------------
Rod F. Dammeyer
/s/ KENNETH A. MERLAU Director
- ---------------------------------------------
Kenneth A. Merlau
/s/ WILLIAM T. PROLER Director
- ---------------------------------------------
William T. Proler
/s/ ROBERT C. LARRY Vice President, Finance, Treasurer and Chief
- --------------------------------------------- Financial
Robert C. Larry Officer (Principal Financial and Accounting Officer)
/s/ GERARD M. JACOBS
*By: ---------------------------------------
Gerard M. Jacobs
Attorney-in-fact
</TABLE>
II-7
<PAGE> 121
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
AEROSPACE METALS, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ MICHAEL SUISMAN Director and Chairman
- --------------------------------------------- (Principal Executive Officer)
Michael Suisman
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ RICHARD DZUBIN Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Richard Dzubin
</TABLE>
II-8
<PAGE> 122
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
AMERICAN SCARP PROCESSING, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ FRANK J. COZZI Director and President
- -------------------------------------------------- (Principal Executive Officer)
Frank J. Cozzi
/s/ GERARD M. JACOBS Director and Vice President
- --------------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- --------------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- --------------------------------------------------
Albert A. Cozzi
/s/ MICHAEL MITCHELL Chief Financial Officer (Principal Financial
- -------------------------------------------------- and Accounting Officer)
Michael Mitchell
</TABLE>
II-9
<PAGE> 123
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
BRIQUETTING CORPORATION OF AMERICA
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GEORGE A. ISAAC III Director, President and Chief Executive Officer
- --------------------------------------------- (Principal Executive Officer)
George A. Isaac III
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ JUDY WILLIAMSON Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Judy Williamson
</TABLE>
II-10
<PAGE> 124
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
CALIFORNIA METALS RECYCLING, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ GEORGE A. ISAAC III Director
- ---------------------------------------------
George A. Isaac III
/s/ KENNETH P. MUELLER Director
- ---------------------------------------------
Kenneth P. Mueller
/s/ ELLIS WHITE President (Principal Executive Officer)
- ---------------------------------------------
Ellis White
/s/ DAVID HERMOSILLO Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
David Hermosillo
</TABLE>
II-11
<PAGE> 125
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
CHARLES BLUESTONE COMPANY
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ PAUL I. HAVESON Director and President
- --------------------------------------------- (Principal Executive Officer)
Paul I. Haveson
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ TINA ZOTTOLA Chief Financial Officer
- --------------------------------------------- (Principal Financial and Accounting Officer)
Tina Zottola
</TABLE>
II-12
<PAGE> 126
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
CIM TRUCKING, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ FRANK J. COZZI Director and President (Principal Executive Officer)
- ---------------------------------------------
Frank J. Cozzi
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ MICHAEL MITCHELL Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Michael Mitchell
</TABLE>
II-13
<PAGE> 127
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
COMETCO CORP.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ FRANK J. COZZI Director and President (Principal Executive Officer)
- ---------------------------------------------
Frank J. Cozzi
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ MICHAEL MITCHELL Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Michael Mitchell
</TABLE>
II-14
<PAGE> 128
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
COZZI BUILDING CORPORATION
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ FRANK J. COZZI Director and President (Principal Executive Officer)
- ---------------------------------------------
Frank J. Cozzi
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ MICHAEL MITCHELL Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Michael Mitchell
</TABLE>
II-15
<PAGE> 129
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
COZZI IRON & METAL, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ FRANK J. COZZI Director and President (Principal Executive Officer)
- ---------------------------------------------
Frank J. Cozzi
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ MICHAEL MITCHELL Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Michael Mitchell
</TABLE>
II-16
<PAGE> 130
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
C SHREDDING CORP.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ FRANK J. COZZI Director and President (Principal Executive Officer)
- ---------------------------------------------
Frank J. Cozzi
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ MICHAEL MITCHELL Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Michael Mitchell
</TABLE>
II-17
<PAGE> 131
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
EMCO TRADING, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ KENNETH P. MUELLER Director and President (Principal Executive Officer)
- ---------------------------------------------
Kenneth P. Mueller
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ GEORGE A. ISAAC III Director
- ---------------------------------------------
George A. Isaac III
/s/ DAVID HERMOSILLO Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
David Hermosillo
</TABLE>
II-18
<PAGE> 132
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
FERREX TRADING CORPORATION
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GEORGE A. ISAAC III Director, President and Chief Executive Officer
- --------------------------------------------- (Principal Executive Officer)
George A. Isaac III
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ JUDY WILLIAMSON Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Judy Williamson
</TABLE>
II-19
<PAGE> 133
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
FIRMA, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ELLIS WHITE President (Principal Executive Officer)
- ---------------------------------------------
Ellis White
/s/ DAVID HERMOSILLO Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
David Hermosillo
</TABLE>
II-20
<PAGE> 134
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
FIRMA PLASTIC CO., INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ELLIS WHITE President (Principal Executive Officer)
- ---------------------------------------------
Ellis White
/s/ DAVID HERMOSILLO Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
David Hermosillo
</TABLE>
II-21
<PAGE> 135
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
HOUSTON COMPRESSED STEEL CORP.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ WILLIAM T. PROLER Director and President (Principal Executive Officer)
- ---------------------------------------------
William T. Proler
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ DAVID SONNIER Treasurer and Secretary (Principal Financial and
- --------------------------------------------- Accounting Officer)
David Sonnier
</TABLE>
II-22
<PAGE> 136
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
HOUTEX METALS COMPANY, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ WILLIAM T. PROLER Executive Vice President (Principal Executive
- --------------------------------------------- Officer)
William T. Proler
/s/ DAVID SONNIER Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
David Sonnier
</TABLE>
II-23
<PAGE> 137
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
THE ISAAC CORPORATION
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GEORGE A. ISAAC III Director, President and Chief Executive Officer
- --------------------------------------------- (Principal Executive Officer)
George A. Isaac III
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ JUDY WILLIAMSON Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Judy Williamson
</TABLE>
II-24
<PAGE> 138
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
KANKAKEE SCRAP CORPORATION
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ FRANK J. COZZI Director
- ---------------------------------------------
Frank J. Cozzi
/s/ RONALD ROMANO President (Principal Executive Officer)
- ---------------------------------------------
Ronald Romano
/s/ MICHAEL MITCHELL Treasurer (Principal Financial and Accounting
- --------------------------------------------- Officer)
Michael Mitchell
</TABLE>
II-25
<PAGE> 139
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
KIMERLING ACQUISITION CORP.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ WILLIAM T. PROLER Director and President (Principal Executive Officer)
- ---------------------------------------------
William T. Proler
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ DAVID SONNIER Treasurer (Principal Financial and Accounting
- --------------------------------------------- Officer)
David Sonnier
</TABLE>
II-26
<PAGE> 140
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
MAC LEOD METALS CO.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ELLIS WHITE President (Principal Executive Officer)
- ---------------------------------------------
Ellis White
/s/ DAVID HERMOSILLO Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
David Hermosillo
</TABLE>
II-27
<PAGE> 141
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
METAL MANAGEMENT ARIZONA, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ KENNETH P. MUELLER Director and President (Principal Executive Officer)
- ---------------------------------------------
Kenneth P. Mueller
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ GEORGE A. ISAAC III Director
- ---------------------------------------------
George A. Isaac III
/s/ DAVID HERMOSILLO Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
David Hermosillo
</TABLE>
II-28
<PAGE> 142
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
METAL MANAGEMENT GULF COAST, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ WILLIAM T. PROLER Director and President (Principal Executive Officer)
- ---------------------------------------------
William T. Proler
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ DAVID SONNIER Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
David Sonnier
</TABLE>
II-29
<PAGE> 143
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
METAL MANAGEMENT REALTY, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ KENNETH P. MUELLER Director and President (Principal Executive Officer)
- ---------------------------------------------
Kenneth P. Mueller
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ GEORGE A. ISAAC III Director
- ---------------------------------------------
George A. Isaac III
/s/ DAVID HERMOSILLO Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
David Hermosillo
</TABLE>
II-30
<PAGE> 144
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on October 1, 1998.
MICHAEL SCHIAVONE & SONS, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on October 1, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ ALBERT A. COZZI Director, President and Chief Executive Officer
- --------------------------------------------- (Principal Executive Officer)
Albert A. Cozzi
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ JAMES KEACH Vice President - Finance and Treasurer (Principal
- --------------------------------------------- Financial and Accounting Officer)
James Keach
</TABLE>
II-31
<PAGE> 145
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
NAPORANO IRON & METAL CO.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ JOSEPH F. NAPORANO Director and President (Principal Executive Officer)
- ---------------------------------------------
Joseph F. Naporano
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ ANDREW NAPORANO Director
- ---------------------------------------------
Andrew Naporano
/s/ JOHN NAPORANO Vice President (Principal Financial and Accounting
- --------------------------------------------- Officer)
John Naporano
</TABLE>
II-32
<PAGE> 146
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
NEWELL RECYCLING WEST, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ G. ROBERT TRIESCH III Director and President (Principal Executive Officer)
- ---------------------------------------------
G. Robert Triesch III
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ MICHAEL MITCHELL Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Michael Mitchell
</TABLE>
II-33
<PAGE> 147
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on October 2, 1998.
NICROLOY ACQUISITION CORP.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on October 2, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ THOMAS NETZER President (Principal Executive Officer)
- ---------------------------------------------
Thomas Netzer
/s/ ROBERT CORTESE Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Robert Cortese
</TABLE>
II-34
<PAGE> 148
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
NIMCO SHREDDING CO.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ JOSEPH F. NAPORANO Director and President (Principal Executive Officer)
- ---------------------------------------------
Joseph F. Naporano
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ ANDREW NAPORANO Director
- ---------------------------------------------
Andrew Naporano
/s/ JOHN NAPORANO Vice President (Principal Financial and Accounting
- --------------------------------------------- Officer)
John Naporano
</TABLE>
II-35
<PAGE> 149
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
138 SCRAP, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ FRANK J. COZZI Director and President (Principal Executive Officer)
- ---------------------------------------------
Frank J. Cozzi
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ MICHAEL MITCHELL Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Michael Mitchell
</TABLE>
II-36
<PAGE> 150
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
PAULDING RECYCLING, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GEORGE A. ISAAC III Director, President and Chief Executive Officer
- --------------------------------------------- (Principal Executive Officer)
George A. Isaac III
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ JUDY WILLIAMSON Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Judy Williamson
</TABLE>
II-37
<PAGE> 151
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
P. JOSEPH IRON & METAL, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ PAUL D. JOSEPH Director and Chief Executive Officer (Principal
- --------------------------------------------- Executive Officer)
Paul D. Joseph
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ STEFANIE VAUGHT Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Stefanie Vaught
</TABLE>
II-38
<PAGE> 152
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
PROLER SOUTHWEST INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ WILLIAM T. PROLER Director and President (Principal Executive Officer)
- ---------------------------------------------
William T. Proler
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ RONALD J. PROLER Director
- ---------------------------------------------
Ronald J. Proler
/s/ DAVID SONNIER Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
David Sonnier
</TABLE>
II-39
<PAGE> 153
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
PROLER STEELWORKS L.L.C.
/s/ WILLIAM T. PROLER
By:
--------------------------------------
William T. Proler
Manager
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ WILLIAM T. PROLER Manager (Principal Executive Officer)
- ---------------------------------------------
William T. Proler
/s/ RONALD J. PROLER Manager
- ---------------------------------------------
Ronald J. Proler
/s/ DAVID SONNIER Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
David Sonnier
</TABLE>
II-40
<PAGE> 154
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
R&P HOLDINGS, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GERARD M. JACOBS Director and President (Principal Executive Officer)
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ ROBERT C. LARRY Vice President and Treasurer (Principal Financial
- --------------------------------------------- and Accounting Officer)
Robert C. Larry
</TABLE>
II-41
<PAGE> 155
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
R&P REAL ESTATE, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ PAUL I. HAVESON Director and President (Principal Executive Officer)
- ---------------------------------------------
Paul I. Haveson
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ TINA ZOTTOLA Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Tina Zottola
</TABLE>
II-42
<PAGE> 156
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
RESERVE IRON & METAL LIMITED
PARTNERSHIP
By: P. JOSEPH IRON & METAL, INC.,
its general partner
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ PAUL D. JOSEPH Director and President of P. Joseph Iron & Metal,
- --------------------------------------------- Inc. (Principal Executive Officer)
Paul D. Joseph
/s/ GERARD M. JACOBS Director and Vice President of P. Joseph Iron &
- --------------------------------------------- Metal, Inc.
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director of P. Joseph Iron & Metal, Inc.
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director of P. Joseph Iron & Metal, Inc.
- ---------------------------------------------
Albert A. Cozzi
/s/ STEFANIE VAUGHT Chief Financial Officer of P. Joseph Iron & Metal,
- --------------------------------------------- Inc. (Principal Financial and Accounting Officer)
Stefanie Vaught
</TABLE>
II-43
<PAGE> 157
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
SALT RIVER RECYCLING, L.L.C.
By: COZZI IRON & METAL, INC.,
its manager
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ FRANK J. COZZI Director and President of Cozzi Iron & Metal, Inc.
- --------------------------------------------- (Principal Executive Officer)
Frank J. Cozzi
/s/ GERARD M. JACOBS Director and Vice President of Cozzi Iron & Metal,
- --------------------------------------------- Inc.
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director of Cozzi Iron & Metal, Inc.
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director of Cozzi Iron & Metal, Inc.
- ---------------------------------------------
Albert A. Cozzi
/s/ MICHAEL MITCHELL Chief Financial Officer of Cozzi Iron & Metal, Inc.
- --------------------------------------------- (Principal Financial and Accounting Officer)
Michael Mitchell
</TABLE>
II-44
<PAGE> 158
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
SCRAP PROCESSING, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ FRANK J. COZZI Director and President (Principal Executive Officer)
- ---------------------------------------------
Frank J. Cozzi
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ MICHAEL MITCHELL Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Michael Mitchell
</TABLE>
II-45
<PAGE> 159
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
SUPERIOR FORGE, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ IAN ALBERT Director and President (Principal Executive Officer)
- ---------------------------------------------
Ian Albert
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALAN SHUMWAY Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Alan Shumway
</TABLE>
II-46
<PAGE> 160
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
TORRINGTON SCRAP COMPANY
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ ROBERT BLENNER President (Principal Executive Officer)
- ---------------------------------------------
Robert Blenner
/s/ JAMES KEACH Vice President and Treasurer (Principal Financial
- --------------------------------------------- and Accounting Officer)
James Keach
</TABLE>
II-47
<PAGE> 161
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
TROJAN TRADING CO.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ELLIS WHITE President and Chief Executive Officer
- --------------------------------------------- (Principal Executive Officer)
Ellis White
/s/ DAVID HERMOSILLO Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
David Hermosillo
</TABLE>
II-48
<PAGE> 162
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chicago, Illinois on September 30,
1998.
USA SOUTHWESTERN CARRIER, INC.
/s/ GERARD M. JACOBS
By:
--------------------------------------
Gerard M. Jacobs
Director and Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gerard M. Jacobs and T. Benjamin
Jennings, and either of them acting individually, as his attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign, each and all
amendments to this Registration Statement (including post-effective amendments),
to sign any additional registration statements for the same offering and
amendments to the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto the
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
satisfying and confirming that the attorney-in-fact and agent, or his
substitutes, may lawfully do or cease to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on September 30, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ KENNETH P. MUELLER Director and President (Principal Executive Officer)
- ---------------------------------------------
Kenneth P. Mueller
/s/ GERARD M. JACOBS Director and Vice President
- ---------------------------------------------
Gerard M. Jacobs
/s/ T. BENJAMIN JENNINGS Director
- ---------------------------------------------
T. Benjamin Jennings
/s/ ALBERT A. COZZI Director
- ---------------------------------------------
Albert A. Cozzi
/s/ GEORGE A. ISAAC III Director
- ---------------------------------------------
George A. Isaac III
/s/ DAVID HERMOSILLO Chief Financial Officer (Principal Financial and
- --------------------------------------------- Accounting Officer)
David Hermosillo
</TABLE>
II-49
<PAGE> 1
EXHIBIT 4.17
SIXTH SUPPLEMENTAL INDENTURE
THIS SIXTH SUPPLEMENTAL INDENTURE, dated as of July 7, 1998, is
executed by Kimerling Acquisition Corp, a Delaware corporation ("Kimerling") and
a wholly-owned subsidiary of METAL MANAGEMENT, INC., a Delaware corporation (the
"Company"), for the sole purpose of granting a guarantee under the Indenture (as
amended from time to time, the "Indenture"), dated as of May 13, 1998, with
respect to the Company's 10% Senior Subordinated Notes due 2008 (the "Notes"),
entered into among the Company, the Guarantors (as defined therein) and LASALLE
NATIONAL BANK, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Company, the Guarantors and the Trustee have entered into the
Indenture. Capitalized terms used herein, not otherwise defined herein, shall
have the meanings given them in the Indenture.
Section 4.18 of the Indenture expressly provides that any Restricted
Subsidiary (i) that has assets or revenues in any fiscal year in excess of
$200,000 or (ii) that is not a Guarantor and is a borrower under the Senior
Credit Facility shall execute a supplemental indenture to become a Guarantor of
the Company's Notes. Pursuant to Section 4.18 of the Indenture, Kimerling hereby
executes this Sixth Supplemental Indenture to a become Guarantor of the
Company's Notes. Kimerling has by Board Resolution, authorized this Sixth
Supplemental Indenture. The Trustee has determined that this Sixth Supplemental
Indenture is in form satisfactory to it.
NOW, THEREFORE, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes issued under the Indenture
from and after the date of this Sixth Supplemental Indenture, as follows:
Section 1. Guarantee on the Notes.
Kimerling hereby subjects itself to the provisions of the Indenture as
a Guarantor in accordance with Article 11 of the Indenture.
Section 2. Counterparts
This Sixth Supplemental Indenture may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties, notwithstanding that all parties have not signed the same
counterpart.
-1-
<PAGE> 2
IN WITNESS WHEREOF, the undersigned have caused this Supplemental
Indenture to be duly executed by its respective officers as of the day and year
first above written.
KIMERLING ACQUISITION CORP.
By: David A. Carpenter
------------------------
David A. Carpenter
Vice President
-2-
<PAGE> 1
EXHIBIT 4.18
SEVENTH SUPPLEMENTAL INDENTURE
THIS SEVENTH SUPPLEMENTAL INDENTURE, dated as of July 9, 1998, is
executed by NICROLOY ACQUISITION CORP., a Delaware corporation ("Nicroloy"), a
wholly-owned subsidiary of METAL MANAGEMENT, INC., a Delaware corporation (the
"Company"), for the sole purpose of granting a guarantee under the Indenture (as
amended from time to time, the "Indenture"), dated as of May 13, 1998, with
respect to the Company's 10% Senior Subordinated Notes due 2008 (the "Notes"),
entered into among the Company, the Guarantors (as defined therein) and LASALLE
NATIONAL BANK, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Company, the Guarantors and the Trustee have entered into the
Indenture. Capitalized terms used herein, not otherwise defined herein, shall
have the meanings given them in the Indenture.
Section 4.18 of the Indenture expressly provides that any Restricted
Subsidiary (i) that has assets or revenues in any fiscal year in excess of
$200,000 or (ii) that is not a Guarantor and is a borrower under the Senior
Credit Facility shall execute a supplemental indenture to become a Guarantor of
the Company's Notes. Pursuant to Section 4.18 of the Indenture, Nicroloy
executes this Seventh Supplemental Indenture to become a Guarantor of the
Company's Notes. Nicroloy has, by Board Resolution, authorized this Seventh
Supplemental Indenture. The Trustee has determined that this Seventh
Supplemental Indenture is in form satisfactory to it.
NOW, THEREFORE, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes issued under the Indenture
from and after the date of this Seventh Supplemental Indenture, as follows:
Section 1. Guarantee on the Notes.
Nicroloy hereby subjects itself to the provisions of the Indenture as a
Guarantor in accordance with Article 11 of the Indenture.
Section 2. Counterparts
This Seventh Supplemental Indenture may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties, notwithstanding that all parties have not signed the same
counterpart.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned have caused this Seventh
Supplemental Indenture to be duly executed by its respective officers as of the
day and year first above written.
NICROLOY ACQUISITION CORP.
By: David A. Carpenter
-----------------------------------------
Name: David A. Carpenter
--------------------------------------
Its: Vice President
---------------------------------------
-2-
<PAGE> 1
EXHIBIT 5.1
[MAYER, BROWN & PLATT LETTERHEAD]
October 6, 1998
Metal Management, Inc.
500 North Dearborn Street, Suite 405
Chicago, Illinois 60610
Ladies and Gentlemen:
We have acted as your counsel in connection with the registration of
certain 10% Senior Subordinated Notes due 2008 (the "Notes") of Metal
Management, Inc., a Delaware corporation (the "Company"), and the guarantees
thereof (the "Guarantees") by certain subsidiaries of the Company listed on
Annex A hereto (the "Guarantors"), pursuant to a registration statement on Form
S-4, registration no. 333-58875 (the "Registration Statement").
In rendering the opinions expressed herein, we have examined and relied
upon such documents, corporate records, certificates of public officials and
certificates as to factual matters executed by officers of the Company and the
Guarantors as we have deemed necessary or appropriate. We have assumed the
authenticity, accuracy and completeness of all documents, records and
certificates submitted to us as originals, the conformity to the originals of
all documents, records and certificates submitted to us as copies and the
authenticity, accuracy and completeness of the originals of all documents,
records and certificates submitted to us as copies. We have also assumed the
legal capacity and genuineness of the signatures of persons signing all
documents in connection with which the opinions expressed herein are rendered.
Based upon the foregoing, we are of the opinion that:
(i) the Notes have been duly authorized for issuance by the Company
and, when the Notes are duly executed, authenticated, issued and
delivered in accordance with the indenture governing the Notes, the
Notes will be legally issued and will constitute a valid and legally
binding obligations of the Company, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally or by the effect of general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing (regardless of
whether considered in a proceeding at law or equity); and
(ii) the Guarantees have been duly authorized for issuance by the
Guarantors and, when the Guarantees are duly executed, authenticated,
issued and delivered in accordance with the
<PAGE> 2
Metal Management, Inc.
October 6, 1998
Page 2
indenture governing the Notes, the Guarantees will be legally issued
and will constitute valid and legally binding obligations of the
Guarantors, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally or by the effect of general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith
and fair dealing (regardless of whether considered in a proceeding at
law or equity).
We are admitted to practice law in the States of Illinois and New York
and we express no opinions as to matters under or involving any laws other than
the laws of the States of Illinois and New York, the federal laws of the United
States of America and the corporate laws of the State of Delaware.
We hereby consent to the filing of this opinion letter as an exhibit to
the Registration Statement and to the reference to this firm under the caption
"Legal Matters."
Very truly yours,
MAYER, BROWN & PLATT
By /s/ Paul W. Theiss
-------------------------------------
Paul W. Theiss, a Partner of the Firm
<PAGE> 3
ANNEX A
Aerospace Metals, Inc., a Delaware corporation
American Scrap Processing, Inc., an Illinois corporation
Briquetting Corporation of America, an Ohio corporation
California Metals Recycling, Inc., a California corporation
Charles Bluestone Company, a Pennsylvania corporation
CIM Trucking, Inc., an Illinois corporation
Cometco Corp., an Illinois corporation
Cozzi Building Corporation, an Illinois corporation
Cozzi Iron & Metal, Inc., an Illinois corporation
C Shredding Corp., an Illinois corporation
EMCO Trading, Inc., an Arizona corporation
Ferrex Trading Corporation, a Delaware corporation
Firma, Inc., a California corporation
Firma Plastic Co., Inc., a California corporation
Houston Compressed Steel Corp., a Texas corporation
HouTex Metals Company, Inc., a Texas corporation
The Isaac Corporation, an Ohio corporation
Kankakee Scrap Corporation, an Illinois corporation
Kimerling Acquisition Corp., a Delaware corporation
Mac Leod Metals Co., a California corporation
Metal Management Arizona, Inc., an Arizona corporation
Metal Management Gulf Coast, Inc., a Delaware corporation
Metal Management Realty, Inc., an Arizona corporation
Michael Schiavone & Sons, Inc., a Delaware corporation
Naporano Iron & Metal Co., a New Jersey corporation
Newell Recycling West, Inc., a Colorado corporation
Nicroloy Acquisition Corp., a Delaware corporation
Nimco Shredding Co., a New Jersey corporation
138 Scrap, Inc., an Illinois corporation
Paulding Recycling, Inc., an Ohio corporation
P. Joseph Iron & Metal, Inc., an Ohio corporation
Proler Southwest Inc., a Texas corporation
Proler Steelworks L.L.C., a Delaware limited liability company
R&P Holdings, Inc., a Delaware corporation
R&P Real Estate, Inc., a Pennsylvania corporation
Reserve Iron & Metal Limited Partnership, a Delaware limited partnership
Salt River Recycling, L.L.C., an Arizona limited liability company
Scrap Processing, Inc., an Illinois corporation
Superior Forge, Inc., a Delaware corporation
Torrington Scrap Company, a Delaware corporation
Trojan Trading Co., a California corporation
USA Southwestern Carrier, Inc., an Arizona corporation
<PAGE> 1
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN MILLIONS)
<TABLE>
<CAPTION>
FIVE MONTHS FISCAL YEAR ENDED
FISCAL YEAR ENDED OCTOBER 31, MARCH 31, MARCH 31,
-------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Pre-tax income (loss) from continuing operations $ (0.6) $ 1.9 $ 1.8 $ (1.6) $ (3.0) $ (29.3)
---------- ---------- ---------- ---------- ---------- ----------
Fixed charges:
Interest expense and amortization of debt 0.3 0.4 1.2 0.5 2.3 11.0
issuance costs
Interest factor on rental expense 0.0 0.0 0.0 0.0 0.3 1.0
--- --- --- --- --- ---
Total fixed charges 0.3 0.4 1.2 0.5 2.6 12.0
--- --- --- --- --- ----
Pre-tax income (loss) before fixed charges $ (0.3) $ 2.3 $ 3.0 $ (1.1) $ (0.4) $ (17.3)
---------- ---------- ---------- ----------- ---------- ----------
Ratio of earnings to fixed charges - 5.4 2.5 - - -
Deficiency of earnings to covered fixed charges $ (0.6) $ - $ - $ (1.6) $ (3.0) $ (29.3)
</TABLE>
<TABLE>
<CAPTION>
PROFORMA
--------------------------
QUARTER ENDED YEAR ENDED QUARTER ENDED
JUNE 30, MARCH 31, JUNE 30,
-----------------
1997 1998 1998 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Pre-tax income (loss) from continuing operations $ 0.6 $ (1.6) $ (33.4) $ (5.8)
---------- ---------- ----------- ---------
Fixed charges:
Interest expense and amortization of debt 1.5 4.9 27.9 6.8
issuance costs
Interest factor on rental expense 0.1 0.2 1.5 0.3
--- --- --- ---
Total fixed charges 1.6 5.1 29.4 7.1
--- --- ---- ---
Pre-tax income (loss) before fixed charges $ 2.2 $ 3.5 $ (4.0) $ 1.3
---------- ---------- ----------- ---------
Ratio of earnings to fixed charges 1.3 - - -
Deficiency of earnings to covered fixed charges $ - $ (1.6) $ (33.4) $ (5.8)
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 1 to the Registration Statement on Form
S-4 (No. 333-58875) of the following: our report dated May 28, 1998, appearing
in Metal Management, Inc.'s Current Report on Form 8-K dated October 5, 1998
(filed October 6, 1998); our report dated August 12, 1997, except as to Note 7,
which is as of March 9, 1998, relating to the financial statements of Aerospace
Metals, Inc., appearing in Metal Management, Inc.'s Current Report on Form 8-K
dated May 1, 1998 and our report dated June 23, 1998, relating to the Naporano
Iron & Metal Co. and Nimco Shredding Co. financial statements appearing in
Metal Management, Inc.'s Current Report on Form 8-K/A dated July 1, 1998 (filed
July 10, 1998). We also consent to the reference to us under the heading
"Experts" in such Prospectus.
PricewaterhouseCoopers LLP
Chicago, Illinois
October 5, 1998
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement No. 333-58875 of Metal Management, Inc. on Form S-4 of
our report, dated April 22, 1997, on the Cozzi Iron & Metal, Inc. financial
statements appearing in the Proxy Statement of Metal Management, Inc. dated
November 20, 1997. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
Deloitte & Touche LLP
- -------------------------
October 5, 1998
