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Filed Pursuant to Rule 424(b)(3)
PROSPECTUS
4,148,343 SHARES
METAL MANAGEMENT, INC.
COMMON STOCK
This Prospectus relates to the resale of up to an aggregate of 4,148,343
shares (the "Shares") of common stock, par value $.01 per share (the "Common
Stock"), of Metal Management, Inc., a Delaware corporation (the "Company"),
which may be offered (the "Offering") for sale by persons (individually a
"Selling Stockholder," collectively the "Selling Stockholders") described in
this Prospectus. The Shares offered for resale hereby were issued, or are
issuable by the Company in respect of the following: (i) 2,193,343 Shares were
issued by the Company in connection with business combination and financing
transactions; and (ii) 1,955,000 Shares are issuable upon exercise of warrants
granted by the Company in business combination and financing transactions or to
employees, advisors or other agents of the Company.
The Shares may be offered for sale from time to time by or for the account
of the Selling Stockholders or their respective pledgees, donees, transferees or
other successors in interest in the open market, on the Nasdaq National Market,
in the over-the-counter market, in privately negotiated transactions, or a
combination of these methods, at market prices prevailing at the time of sale,
at prices related to the prevailing market prices or at negotiated prices. The
Shares are intended to be sold through one or more broker-dealers or directly to
purchasers. These broker-dealers may receive compensation in the form of
commissions, discounts or concessions from the Selling Stockholders or
purchasers of the Shares for whom the broker-dealer may act as agent, or to whom
the Selling Shareholders may sell as principal, or both (which compensation as
to a particular broker-dealer may be in excess of customary concessions). The
Selling Stockholders and any broker-dealers who act in connection with the sale
of the Shares hereunder may be deemed to be "underwriters" within the meaning of
the Securities Act of 1933, as amended (the "Securities Act") and any
commissions received by them and the proceeds of any resale of the Shares may be
deemed to be underwriting discounts and commissions under the Securities Act.
If all of the warrants referred to in (ii) above are exercised, the Company
will receive proceeds of $22,158,750. The Company will receive no portion of the
proceeds from the sale of the Shares offered hereby and will bear certain
expenses incident to their registration. See "Selling Stockholders" and "Plan of
Distribution."
The Common Stock is currently traded on The Nasdaq Stock Market -- National
Market ("Nasdaq") under the symbol "MTLM." On April 29, 1998, the last reported
price for the Common Stock as reported by Nasdaq was $12.94 per share. As of
April 28, 1998, the Company had a total of 33,046,004 shares of Common Stock
outstanding.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH UNDER
THE CAPTION "RISK FACTORS" APPEARING IN THE COMPANY'S CURRENT REPORT ON FORM
8-K, DATED MAY 1, 1998, AS THE SAME MAY BE AMENDED FROM TIME TO TIME.
THESE SECURITIES 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.
MAY 1, 1998
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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 Securities and
Exchange Commission (the "Commission"). These 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 Commission's
regional offices located at Citicorp Center, Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661 and at Seven World Trade Center, Suite 1300, New
York, New York, 10048. Copies of such material can also be obtained from the
Commission at prescribed rates through its Public Reference Section at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains a site on
the World Wide Web at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The 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.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Shares offered hereby
(including all amendments and supplements thereto, the "Registration
Statement"). This Prospectus, which forms a part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement,
certain parts of which have been omitted in accordance with the rules and
regulations of the Commission. Statements contained herein concerning the
provisions of certain documents are not necessarily complete and, in each
instance, reference is made to the copy of such document filed as an exhibit to
the Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference. The Registration
Statement and the exhibits thereto can be inspected and copied through EDGAR,
the Commission's on-line filing service.
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THE COMPANY
GENERAL
The Company and its wholly-owned subsidiaries are engaged in the business
of dismantling, processing, marketing, brokering and recycling both ferrous and
non-ferrous metals with the goal of becoming one of the largest recyclers of
scrap metal in North America. The Company operates, or participates in joint
ventures operating, forty-six recycling centers in eleven states and resells
processed scrap metal and other materials to domestic and foreign customers. The
Company intends to continue its expansion principally through acquisitions. The
Company believes that the scrap metal recycling industry is highly fragmented,
and that no single company is a significant processor of scrap metal on a
national scale, although certain companies are significant processors on a local
or regional scale.
The Company entered the scrap metal recycling industry on April 11, 1996,
through its merger with EMCO Recycling Corp. ("EMCO"), headquartered in Phoenix,
Arizona. As part of the strategic redirection, in April 1996 management
announced plans to exit its Spectra*Star printer and consumables business. On
July 16, 1996, the inventory and related production equipment of this business
was sold for approximately $1.3 million in cash and an agreement by the
purchaser to pay the Company a percentage of revenues royalties on future sales
of Spectra*Star printers and related consumables. The Company discontinued and
sold its VideoShow and related products lines business ("VideoShow") in December
1996 for consideration substantially in the form of royalties on future sales of
VideoShow equipment in an amount which the Company does not expect will be
material.
The Company was founded in 1981 and re-incorporated in Delaware in June
1986. Prior to April 11, 1996, the Company was called General Parametrics
Corporation. On April 9, 1996, the Company's stockholders approved an amendment
to its Certificate of Incorporation to change the name to Metal Management, Inc.
Effective April 15, 1996, the Company changed its Nasdaq Stock symbol to "MTLM".
On April 25, 1996, the Board of Directors of the Company approved a change in
the Company's fiscal year-end from October 31 to March 31, effective April 1,
1996.
The Common Stock is traded on the Nasdaq Stock Market 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.
USE OF PROCEEDS
This Prospectus relates to Shares being offered and sold for the accounts
of the Selling Stockholders. The Company will not receive any proceeds from the
sale of the Shares but will receive proceeds of $22,158,750 if all the warrants
referred to herein are exercised. There can be no assurance that any of the
warrants will be exercised or that the Company will receive any proceeds on
exercise thereof. The Company has agreed to pay all expenses related to the
registration of the Shares. See "Plan of Distribution."
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SELLING STOCKHOLDERS
The following table sets forth the name of each Selling Stockholder, the
aggregate number of Shares of Common Stock beneficially owned by each Selling
Stockholder as of March 5, 1998 (including Shares that are issuable on exercise
of options, warrants or the conversion of the Series A Preferred Stock), and the
aggregate number of shares of Common Stock registered hereby that each Selling
Stockholder may offer and sell pursuant to this Prospectus. Because the Selling
Stockholders may offer all of a portion of the Shares at any time and from time
to time after the date hereof, no estimate can be made of the number of Shares
that each Selling Stockholder may retain upon completion of the Offering.
However, assuming all of the Shares offered hereunder are sold by the Selling
Stockholders, then unless otherwise noted, after completion of the Offering,
none of the Selling Stockholders will own more than one percent of the shares of
Common Stock outstanding. Of the 4,148,343 Shares offered hereby, 2,193,343
Shares were issued and outstanding as March 5, 1998, and an aggregate of
1,955,000 Shares have been reserved for issuance by the Company to certain of
the Selling Stockholders upon the exercise of warrants. Based on information
provided to the Company by the Selling Stockholders, no Selling Stockholder owns
1% or more except as indicated below. Beneficial ownership after the Offering
will depend on the number of Shares sold by each Selling Stockholder. The table
set forth below does not include such additional number of Shares which may be
issuable upon exercise of warrants to prevent dilution resulting from stock
splits, stock dividends or similar events, all of which Shares, to the extent
permitted under Rule 416 of the Securities Act, are being offered by this
Prospectus.
<TABLE>
<CAPTION>
SHARES SHARES TO BE
BENEFICIALLY PERCENTAGE OFFERED FOR
OWNED PRIOR OWNED THE SELLING
TO THE PRIOR TO STOCKHOLDER'S
SELLING STOCKHOLDERS OFFERING OFFERING ACCOUNT
-------------------- ------------ ---------- -------------
<S> <C> <C> <C>
Copperstate Metals, Inc............................... 305,587(1) * 1,970
Diana Crone........................................... 10,000(2) * 10,000
Danny Corp............................................ 394,835(3) 1.26% 394,835
Empire Metals......................................... 2,573,050(4) 8.09% 575,856
Xavier Hermosillo..................................... 65,000(5) * 10,000
Gerard M. Jacobs...................................... 1,688,051(6) 5.23% 99,718
T. Benjamin Jennings.................................. 1,687,849(7) 5.23% 99,516
Marvin Adler Management Consultants, Inc.............. 8,058(8) * 8,058
Dale Moorehead........................................ 20,000(9) * 10,000
Evelyn Moorehead...................................... 10,000(10) * 10,000
Donald F. Moorehead................................... 916,143(11) 2.90% 170,406
George O. Moorehead................................... 438,996(12) 1.39% 270,461
Newell Phoenix, L.L.C................................. 100,000(13) * 100,000
Samstock, L.L.C....................................... 2,070,588(14) 6.50% 2,070,588
Norma Stachura........................................ 10,000(15) * 10,000
Michael Suisman....................................... 5,000(16) * 5,000
David M. Zack......................................... 301,862(17) * 100,645
Gerald Zack........................................... 301,862(18) * 100,645
Raymond Zack.......................................... 385,196(19) 1.23% 100,645
---------- ---------
Total....................................... 11,292,077 4,148,343
========== =========
</TABLE>
- ---------------
* less than 1%
1. Consists of 305,587 shares issued in connection with the acquisition of
EMCO.
2. Consists of warrants to purchase 10,000 shares.
3. Consists of 394,835 shares issued in connection with the Company's
acquisition of substantially all of the assets of Aerospace.
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4. Consists of warrants to purchase 562,900 shares and 2,010,150 shares issued
to Empire Metals in connection with the Company's acquisition of EMCO.
5. Consists of warrants to purchase 35,000 shares and options to purchase
30,000 shares.
6. Director and Chief Executive Officer of the Company. Consists of warrants to
purchase 808,333 shares, options to purchase 200,000 shares, 510,000 shares
purchased by Mr. Jacobs, 70,000 shares issued to Mr. Jacobs in a private
offering and 99,718 shares issued upon conversion of Series A preferred
stock.
7. Chairman of the Board and Chief Development Officer of the Company. Consists
of warrants to purchase 808,333 shares, options to purchase 200,000 shares,
510,000 shares purchased by Mr. Jennings, 70,000 shares issued to Mr.
Jennings in a private offering, and 99,516 shares issued upon conversion of
Series A preferred stock.
8. Consists of 8,058 shares issued in connection with the Company's acquisition
of substantially all of the assets of Aerospace.
9. Consists of warrants to purchase 10,000 shares and options to purchase
10,000 shares.
10. Consists of warrants to purchase 10,000 shares.
11. Director and Vice Chairman of the Board of the Company. Consists of warrants
to purchase 251,933 shares, 44,110 shares issuable upon conversion of Series
A Preferred Stock, 300,000 shares purchased by Mr. Moorehead, 25,000 shares
issued to Mr. Moorehead in a private offering, 280,100 shares issued to Mr.
Moorehead in connection with the EMCO acquisition, and options to purchase
15,000 shares.
12. Consists of warrants to purchase 351,833 shares, 40,000 shares purchased by
Mr. Moorehead, 25,000 shares issued to Mr. Moorehead in a private offering
and 22,163 shares issued to Mr. Moorehead in connection with the EMCO
acquisition.
13. Consists of 100,000 shares issued in connection with the acquisition of a
50% membership interest in Salt River.
14. Consists of 1,470,588 shares and warrants to purchase 600,000 shares issued
in a private placement.
15. Consists of warrants to purchase 10,000 shares.
16. Consists of warrants to purchase 5,000 shares.
17. Consists of warrants to purchase 100,000 shares, 100,000 shares issued to
Mr. Zack in connection with the Company's acquisition of EMCO, and 101,862
shares owned by Copperstate Metals, Inc.
18. Consists of warrants to purchase 100,000 shares, 100,000 shares issued to
Mr. Zack in connection with the Company's acquisition of EMCO, and 101,862
shares owned by Copperstate Metals, Inc.
19. Consists of warrants to purchase 183,333 shares, 100,000 shares issued to
Mr. Zack in connection with the EMCO acquisition, and 101,863 shares owned
by Copperstate Metals, Inc.
There are no material relationships between any of the Selling Stockholders
and the Company or any of its predecessors or affiliates, nor have any such
material relationships existed within the past three years, except as follows:
On April 11, 1996, the Company and Harold Rubenstein, a Director of the
Company, 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 and $63,000
for the year ended March 31, 1997 and the nine months ended December 31, 1997,
respectively.
The Company has issued a promissory note due April 11, 1999 bearing
interest at 9% per year with a balance outstanding as of December 31, 1997 of
$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 with a balance as
of December 31, 1997 of $403,000 to Harold Rubenstein. During the fiscal year
ended March 31, 1997, the Company paid $78,000 of interest to H&S Broadway and
Harold Rubenstein.
On December 19, 1997, the Company made a loan of $300,000 to Newell
Phoenix, L.L.C. The loan bears interest at the prime rate and is due on or about
May 1, 1998. The loan is secured by 18,000 shares of the
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Company's Common Stock. On January 30, 1998, the Company received a payment of
$73,000 with respect to the Newell loan.
From August 1995 through November 1997, 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 the services. On December 1,
1997, Mr. Hermosillo became an employee of the Company. As a finder's fee in
connection with the Superior Forge acquisition, the Company has agreed to issue
to Mr. 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 make a cash payment to him of $25,000.
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. For the year ended March 31, 1997, the Company paid Ellis Metals $30,000
under the terms of the agreement. Inventory purchases from Ellis Metals were
$3.9 million for the year ended March 31, 1997 and $2.5 million for the nine
months ended December 31, 1997. The Company also had sales to Ellis Metals of
$0.3 million for the year ended March 31, 1997. As of December 31, 1997, the
Company had net accounts payable of $68,000 to Ellis Metals. 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 year.
The Company has also entered into various transactions with Empire Scrap
Metals, Inc. ("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 $0.3 million for both the
year ended March 31, 1997 and the nine months ended December 31, 1997.
The Company also leased certain land to Ellis Metals. The Company received
$78,000 and $64,000 in rent payments from Ellis Metals for the year ended March
31, 1997 and the nine months ended December 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 guarantees to the bank. In
consideration of the guarantees, 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.
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, and as a director of EMCO, effective December 1, 1997;
(ii) Mr. Moorehead delivered to the Company a Non-Compete, Non-Solicitation and
Confidentiality Covenant and Agreement; (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 to Mr. Moorehead warrants to purchase 200,000
shares of Common Stock at $12.00 per share, exercisable until December 1, 2002,
and paid Mr. Moorehead amounts totalling $665,000.
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
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commenced with the acquisition of the Isaac Group on June 23, 1997. The annual
base rent for the property is approximately $317,000.
HouTex 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.
The MacLeod Companies lease certain land from Ian MacLeod, a former
Director of the Company, under a five-year lease (subject to three five-year
extensions) providing for an annual base rent of $48,000. The Company owns the
real property on which the MacLeod Companies' principal activities are
performed.
George A. Isaac III, William M. Isaac, Lynn A. Isaac, Richard G. Isaac, and
Charles A. Isaac were the primary shareholders of the Isaac Group which was
acquired by the Company on June 23, 1997, and received an aggregate of 1,942,857
Shares and warrants to purchase 826,923 Shares in connection with the
acquisition. Copperstate Metals, Inc., David M. Zack, Gerald Zack, Raymond F.
Zack, Harold Rubenstein, George O. Moorehead and Donald F. Moorehead, Jr. were
the ultimate primary shareholders of EMCO Recycling Corp. which was acquired by
the Company on April 11, 1996, and received an aggregate of 3,500,000 Shares and
warrants to purchase 1,000,000 Shares in connection with the acquisition. Ian
MacLeod was the primary shareholder of the MacLeod Group of Companies which was
acquired by the Company on January 1, 1997, and received 885,000 Shares and
warrants to purchase 175,000 Shares in connection with the acquisition. Paul D.
Joseph, Scott Joseph and Steven C. Joseph were the primary shareholders of
Reserve Iron & Metal, L.P. which was acquired by the Company on May 1, 1997, and
received warrants to purchase an aggregate of 1,400,000 Shares and a note
payable convertible into 182,087 Shares in connection with the acquisition. Mike
Melnik and Zalman Melnik were the primary shareholders of HouTex Metals Company,
Inc. which was acquired by the Company on January 7, 1997, and received an
aggregate of 252,222 Shares in connection with the acquisition.
On December 19, 1997 an Amended and Restated Stockholders' Agreement
("Stockholders Agreement") was entered into by and among T. Benjamin Jennings,
Gerard M. Jacobs, Albert A. Cozzi, Frank J. Cozzi, Gregory P. Cozzi, and
Samstock L.L.C. The Stockholders Agreement is described in the Description of
Capital Stock section of this Prospectus. Rod Dammeyer joined the Board of
Directors of the Company in connection with the Samstock investment.
On January 20, 1998 ("Closing Date") AMI Acquisition Company, a wholly
owned subsidiary of the Company entered into a 10 year lease with Aerospace
Metals, Inc. The lease provides for annual rent payments of approximately
$150,000 in years 1 and 2 and $300,000 per year thereafter. The Company has
guaranteed the lease obligation of AMI Acquisition Company. The Company has an
option to purchase the real property for fair market value from the fifth
anniversary of the Closing Date.
PLAN OF DISTRIBUTION
The Shares may be sold or distributed from time to time by the Selling
Stockholders, or by pledgees, donees or transferees of, or other successors in
interest to, the Selling Stockholders, directly to one or more purchasers
(including pledgees) or through brokers, dealers or underwriters who may act
solely as agents or may acquire Shares as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices, or at fixed prices, which may be changed. The
distribution of the Shares may be effected by one or more of the following
methods: (i) ordinary brokers' transactions, which may include long or short
sales; (ii) transactions involving cross or block trades or otherwise on the
Nasdaq National Market; (iii) purchases by brokers, dealers or underwriters as
principals and resale by such purchasers for their own accounts pursuant to this
Prospectus; (iv) "at the market" to or through market makers or into an existing
market for the Common Stock; (v) in other ways not involving market makers or
established trading markets, including direct sales to purchasers or sales
effected through agents; (vi) through transactions in options, swaps or other
derivatives (whether exchange-listed or otherwise), or (vii) any combination of
the foregoing, or by any other legally available means. In addition, the Selling
Stockholders or their successors in interest may enter into hedging transactions
with broker-dealers who may engage in short sales of Common Stock in the course
of hedging the positions they assume with the Selling Stockholders. The
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Selling Stockholders or their successors in interest may also enter into option
or other transactions with broker-dealers that require the delivery to such
broker-dealers of the Shares, which Shares may be resold thereafter pursuant to
this Prospectus.
Brokers, dealers, underwriters or agents participating in the distribution
of the Shares as agent may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders (and, if they act as
agent for the purchaser of such Shares, from such purchaser). Such discounts,
concessions or commissions as to a particular broker, dealer, underwriter or
agent might be greater or less than those customary in the type of transaction
involved.
The Selling Stockholders and any such brokers, dealers or other agents that
participate in such distribution may be deemed to be "underwriters" within the
meaning of the Securities Act, and any discounts, commissions or concessions
received by the Selling Stockholders and any such brokers, dealers or other
agents might be deemed to be underwriting discounts and commissions under the
Securities Act. Neither the Company nor the Selling Stockholders can presently
estimate the amount of any such compensation. The Company knows of no existing
arrangements between any Selling Stockholder and any other Selling Stockholder,
broker, dealer or other agent relating to the sale or distribution of the
Shares.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of any of the Shares may not simultaneously engage in
market activities with respect to the Common Stock for the applicable period
under Regulation M prior to the commencement of such distribution. In addition
and without limiting the foregoing, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including without limitation Rules 10b-5 and Regulation M, which may
limit the timing of purchases and sales of any of the Shares by the Selling
Stockholders. All of the foregoing may affect the marketability of the Common
Stock.
The Company will pay substantially all of the expenses incident to this
Offering of the Shares by the Selling Stockholders other than commissions,
concessions and discounts of brokers, dealers or other agents. Each Selling
Stockholder may indemnify any broker, dealer, or other agent that participates
in transactions involving sales of the Shares against certain liabilities,
including liabilities arising under the Securities Act. The Company has agreed
to indemnify certain Selling Stockholders and any such statutory "underwriter"
and controlling persons of such "underwriter" against certain liabilities,
including certain liabilities under the Securities Act.
In order to comply with certain states' securities laws, if applicable, the
Shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers.
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DESCRIPTION OF CAPITAL STOCK
The Amended and Restated Certificate of Incorporation of the Company (the
"Certificate of Incorporation") authorizes capital stock consisting of
80,000,000 shares of Common Stock, par value $.01 per share, and 4,000,000
shares of preferred stock without designation, par value $0.01 per share
("Preferred Stock"). There were 33,046,004 shares of Common Stock issued and
outstanding as of April 28, 1998. Additionally, the Board of Directors has
designated 36,000 shares of Preferred Stock as "Series A Preferred Stock," face
amount of $1,000 per share, 15,094 shares of which were outstanding as of April
28, 1998, and 23,000 shares of Preferred Stock as "Series B Preferred Stock,"
face amount of $1,000 per share, 19,850 shares of which were outstanding as of
April 28, 1998. The following summary description of the capital stock of the
Company is qualified in its entirety by reference to the Certificate of
Incorporation and Bylaws of the Company.
Common Stock. Each share of Common Stock is entitled to one vote. There
are no preemptive, subscription, conversion or redemption rights pertaining to
the shares of Common Stock. Stockholders are entitled to receive dividends as
declared by the Board of Directors out of assets legally available therefor and
to share ratably in the assets of the Company available upon liquidation.
Preferred Stock. The Company's certificate of incorporation grants the
Board of Directors the right to cause the Company to issue, from time to time,
all or part of the preferred stock remaining undesignated in one or more series,
and to fix the number of shares of preferred stock remaining undesignated and
determine or alter for each series, the voting powers, full, limited, or none,
and other designations, preferences, or relative, participating, optional or
other special rights and such qualifications, limitations, or restrictions
thereof. On August 8, 1997, the Company designated 36,000 shares of preferred
stock as "Series A Convertible Preferred Stock," par value $.01 per share
(Stated Value of $1,000 per share). On November 20, 1997, the Company designated
23,000 shares of preferred Stock as "Series B Convertible Preferred Stock," par
value $.01 per share (Stated Value of $1,000 per share).
The Series A Preferred Stock has a "Liquidation Preference" equal to $1,000
per share plus any accrued and unpaid dividends. Upon the liquidation,
dissolution or winding up of the Company, holders of the Series A Preferred
Stock are entitled to receive payment of the Liquidation Preference on a pro
rata basis based on the Liquidation Preference of the preferred stock held by
each holder before any payment is made to holders of Common Stock or any stock
of the Company junior to the Series A Preferred Stock.
Dividends on the Series A Preferred Stock accrue at an annual rate of 6% of
the Stated Value and are payable in cash or, at the Company's option, and upon
satisfaction of certain conditions, in additional shares of Series A Preferred
Stock. The holders of Series A Preferred Stock are able to convert the shares of
Series A Preferred Stock into Common Stock at a price equal to the lower of: (i)
$18.30 (to be adjusted to reflect stock splits, stock dividends or similar
events); or (ii) 85% of the average closing bid price for the common stock for
the five trading days prior to the conversion date.
If the conversion of the Series A Preferred Stock would result in the
holders receiving more than 2,500,000 shares of Common Stock, then the Company
may redeem any shares of Series A Preferred Stock in excess of 2,500,000 shares
at a redemption price equal to: (i) 117% of the Stated Value of the shares; plus
(ii) any accrued and unpaid dividends on such shares. Any shares of Series A
Preferred Stock which have not been converted on or before August 8, 2000 (the
"Maturity Date") will automatically be converted to shares of Common Stock at
the Maturity Date. However, if, at the Maturity Date any of the "Mandatory
Conversion Conditions" are not satisfied, then the Company will be required to
pay the holders of Series A Preferred Stock cash in an amount equal to the
Liquidation Preference for each share of Series A Preferred Stock owned by the
holder. "Mandatory Conversion Conditions" include: (i) a registration statement
covering the resale of all of the shares of Common Stock issuable upon
conversion of the Series A Preferred Stock is effective, or such resale may be
made under Rule 144(k) under the Securities Act.
The Series A Preferred Stock does not grant holders voting rights except
that, so long as the Series A Preferred Stock is outstanding, without the prior
approval of the holders of at least a majority of all shares of the Series A
Preferred Stock outstanding at the time, the Company may not: (i) increase the
number of shares of Series A Preferred Stock which the Company is authorized to
issue; (ii) alter or change the rights,
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<PAGE> 10
preferences or privileges of the Series A Preferred Stock or any other capital
stock of the Company so as to adversely affect the Series A Preferred Stock; or
(iii) create any new class or series of capital stock having a preference over
the Series A Preferred Stock as to distribution of assets upon liquidation,
dissolution or winding up of the Company. Approval of holders of the Series A
Preferred Stock as to actions described in (ii) and (iii) above will not be
required if the average closing price for the Common Stock on the five trading
days immediately preceding the effective date of such a change is equal to or
exceeds $27.45 per share.
The Series B Preferred Stock has a liquidation preference equal to $1,000
per share plus any accrued and unpaid dividends. Upon the liquidation,
dissolution or winding up of the Company, holders of the Series B Preferred
Stock are entitled to receive payment of the liquidation preference on a pro
rata basis based on the Liquidation Preference of the stock held by each holder
before any payment is made to holders of Common Stock or any stock of the
Company junior to the Series B Preferred Stock.
Dividends on the Series B Preferred Stock accrue, whether or not declared
by the Board of Directors, at an annual rate of 4.5% of the Stated Value of each
outstanding share of Series B Preferred Stock. Dividends and are payable in cash
or, at the Company's option, and upon satisfaction of certain conditions, in
additional shares of Series B Preferred Stock.
The holders of Series B Preferred Stock may convert shares of Series B
Preferred Stock into Common Stock at a price equal to the lowest of: (i) 120% of
the closing bid price for the Common Stock on the date of purchase of the Series
B Preferred Stock (to be adjusted to reflect stock splits, stock dividends or
similar events) (the "Fixed Conversion Price"); (ii) 92.5% of the average
closing bid price for the Common Stock for the five trading days prior to the
date of the conversion notice; or (iii) if applicable, the lowest traded price
of the Common Stock during the time when the Common Stock is not listed on the
Nasdaq National Market or listed on the New York Stock Exchange or other
national securities exchange.
If the conversion of the Series B Stock would result in the holders
receiving more than 2,000,000 Shares of Common Stock, then the Company may
redeem any shares of Series B Stock in excess of 2,000,000 shares at a
redemption price equal to: (i) 117% of the Stated Value of the shares; plus (ii)
any accrued and unpaid dividends on such shares. Any shares of Series B
Preferred Stock which have not been converted within three years from the date
of purchase will automatically be converted to shares of Common Stock at the
maturity date of the Series B Preferred Stock. However, if, at the maturity
date, a registration statement covering the resale of all of the shares of
Common Stock issuable upon conversion of the Series B Preferred Stock is not
effective, and resale may not be made under Rule 144(k) under the Securities
Act, then the Company will be required to pay to the holders of Series B
Preferred Stock cash in an amount equal to the liquidation preference for the
shares of Series B Preferred Stock owned by the holder.
The Series B Preferred Stock does not grant holders voting rights except
that, so long as shares of Series B Preferred Stock are outstanding, without the
prior approval of the holders of at least a majority of all shares of the Series
B Preferred Stock outstanding at the time, the Company may not: (i) increase the
number of shares of Series B Preferred Stock which the Company is authorized to
issue; (ii) alter or change the rights, preferences or privileges of the Series
B Preferred Stock or any other capital stock of the Company so as to adversely
affect the Series B Preferred Stock; or (iii) create any new class or series of
capital stock having a preference over the Series B Preferred Stock as to
distribution of assets upon liquidation, dissolution or winding up of the
Company. Approval of holders of the Series B Preferred Stock as to actions
described in (ii) and (iii) above will not be required if the average closing
price for the Common Stock on the five trading days immediately preceding the
effective date of such a change is equal to or exceeds 150% of the Fixed
Conversion Price.
Certificate of Incorporation and Bylaws. The Company's Certificate of
Incorporation was amended on April 9, 1996 to change the Company's corporate
name to Metal Management, Inc. The directors of the Company are elected each
year at the annual meeting of the stockholders for terms of one year and until
their successors are elected and qualified; existing directors may nominate and
elect qualified persons to fill vacancies on the Board of Directors.
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Stockholders' Agreement. Albert A. Cozzi, Frank J. Cozzi and Gregory P.
Cozzi (collectively, the "Cozzi Stockholders"), Samstock, L.L.C. ("Samstock")
and Messrs. Jacobs and Jennings (collectively, the "MTLM Stockholders") and the
Company entered into a stockholders agreement dated as of December 19, 1997 and
having a term of ten years, unless renewed or extended (the "Stockholders
Agreement"). Under the Stockholders Agreement, the Cozzi Stockholders, Samstock
and the MTLM Stockholders have agreed that each group will act in a manner to
cause the nomination of the directors slated for election at each annual meeting
of the Company, five of whom shall be selected by the Cozzi Stockholders and
five of whom shall be selected by the MTLM Stockholders (provided that each
group has agreed to nominate one individual, independent and unaffiliated from
each group or the Company, as part of its slate) and one of whom shall be
selected by Samstock. The Stockholders Agreement further requires each group to
vote for the other group's nominees for election to the Board and 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; or (viii) declare or pay any dividends or distributions.
Transfer Agent and Registrar. The Transfer Agent and Registrar for the
Common Stock is LaSalle National Bank of Chicago.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Shefsky & Froelich Ltd., Chicago, Illinois. Certain attorneys
employed by Shefsky & Froelich Ltd. beneficially own, or have the right to
acquire through exercise of warrants or options granted to such individuals, an
aggregate of approximately 133,000 shares of the Company's Common Stock as of
the date hereof. Certain members of the firm have also received compensation in
the form of warrants for non-legal services partly in connection with certain
financings completed by the Company.
EXPERTS
The consolidated balance sheets and the related consolidated statements of
operations, of cash flows and of changes in stockholders' equity of the Company
and its subsidiaries at March 31, 1997 and October 31, 1995, and the results of
their operations and their cash flows for the year ended March 31, 1997, the
five months ended March 31, 1996 and for each of the two years in the period
ended October 31, 1995, incorporated in this Prospectus by reference to the
Company's Annual Report on Form 10-K (as amended) for the fiscal year ended
March 31, 1997, and the Company's Proxy Statement dated November 20, 1997 have
been so incorporated in reliance on the report of Price Waterhouse 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.
The balance sheets of The Isaac Corporation and Ferrex Trading Corporation
at December 31, 1996 and 1995 and the related statements of income,
shareholders' equity and cash flows for the years ended December 31, 1994, 1995
and 1996, incorporated in this Prospectus by reference to the Company's current
report on Form 8-K dated June 23, 1997, have been audited by Ernst & Young LLP,
independent auditors, as
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<PAGE> 12
set forth in their reports thereon incorporated herein in reliance upon such
reports given upon the authority of such firm as experts in auditing and
accounting.
The consolidated balance sheets as of June 1, 1996 and May 31, 1997, and
the consolidated statements of income, retained earnings, and cash flows for
each of the three years ended June 3, 1995, June 1, 1996 and May 31, 1997,
incorporated in this Prospectus by reference to the Company's current report on
Form 8-K dated January 20, 1998, have been so incorporated in reliance on the
report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference herein the following documents filed
pursuant to the Exchange Act under the Company's Exchange Act File No. 0-14836:
(i) the Company's Annual Report on Form 10-K (as amended) for the fiscal year
ended March 31, 1997; (ii) the Company's Quarterly Reports on Form 10-Q for the
periods ended June 30, 1997, September 30, 1997 and December 31, 1997; (iii) the
Company's Amended Quarterly Report on Form 10-QA for the periods ended September
30, 1997 and December 31, 1997; (iv) the Company's Current Report on Form 8-K
dated May 1, 1997 (relating to the Reserve acquisition and including historical
and proforma financial statements); (v) the Company's Current Report on Form 8-K
dated June 23, 1997 (relating to the Isaac acquisition and including historical
and pro forma financial statements); (vi) the Company's Current Report on Form
8-K dated August 28, 1997 (relating to the Proler acquisition); (vii) the
Company's Current Report on Form 8-K dated October 24, 1997 (relating to the
reclassification of amounts received from the sale of the Series A Preferred
Stock); (viii) the Company's Proxy Statement dated November 20, 1997; (ix) the
Company's Current Report on Form 8-K dated December 1, 1997 (relating to the
acquisition of Cozzi Iron & Metal, Inc.); (x) the Company's Current Report on
Form 8-K dated December 18, 1997 (relating to the private equity placement to
Samstock); (xi) the Company's Current Report on Form 8-K dated January 8, 1998
(relating to the acquisition of Houston Compressed Steel Corp.); (xii) the
Company's Current Report on Form 8-K dated January 20, 1998 (relating to the
acquisition of substantially all of the assets of Aerospace Metals, Inc. and
including historical and pro forma financial statements); (xiii) the Company's
Current Report on Form 8-K dated March 31, 1998 (relating to the Company's
Senior Credit Facility); (xiv) the Company's Current Report on Form 8-K dated
May 1, 1998 (relating to interim financial statements of Aerospace and pro forma
financial statements of the Company); and (xv) the Company's Current Report on
Form 8-K dated May 1, 1998 (relating to certain risks associated with the
Company's business).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the Offering 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 or information 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 herein or in any subsequently filed document that also is, or is
deemed to be, incorporated herein by reference, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or 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, an untrue statement of a 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, upon written or oral request of the person, a copy of any or all of
the foregoing documents or information referred to above that has been
incorporated herein by reference in this Prospectus (other than exhibits to
documents, unless these exhibits are specifically incorporated by reference into
the documents). Requests for these documents should be made to Mr. Robert C.
Larry at the Company's principal executive offices located at 500 North Dearborn
Street, Suite 405, Chicago, Illinois 60610; telephone number (312) 645-0700.
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................... 2
The Company.............................. 3
Use of Proceeds.......................... 3
Selling Stockholders..................... 4
Plan of Distribution..................... 7
Description of Capital Stock............. 9
Legal Matters............................ 11
Experts.................................. 11
Incorporation of Certain Documents
by Reference........................... 12
</TABLE>
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METAL
MANAGEMENT, INC.
------------------------
PROSPECTUS
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4,148,343
SHARES OF
COMMON STOCK
($.01 PAR VALUE)
=========================================================
