FOR IMMEDIATE RELEASE June 11, 2000
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For further information contact: Barry R. Pearl
Vice President Finance, CFO
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MAVERICK TUBE CORPORATION - PRUDENTIAL STEEL LTD.
Joint Press Release
Maverick Tube and Prudential Steel Agree to Combine Businesses
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Chesterfield, Missouri and Calgary, Alberta, June 11, 2000 - Maverick Tube
Corporation (NASDAQ: MAVK) and Prudential Steel Ltd. (TSE: PTS) today announced
that they have agreed to combine their businesses in a transaction that will
create the largest North American producer of welded oil country tubular goods
and line pipe for the energy industry and a major supplier of hollow structural
sections for industrial markets. The combined company will operate 10 tube mills
at five locations in the U.S. and Canada with the capacity to produce
approximately 1.5 million tons of tubular products annually.
Under the terms of the definitive agreement, Prudential shareholders will
receive Maverick common equivalent shares, known as "exchangeable shares," based
on a fixed exchange ratio of 0.52 exchangeable shares for each Prudential share
held. The shares will be exchangeable, at each holder's option, for Maverick
common shares on a one-for-one basis. The agreement was unanimously approved by
the Boards of Directors of both companies.
The combination will result in approximately 34.6 million diluted shares of
Maverick to be outstanding, with a market capitalization of approximately US$1.1
billion based on the June 9, 2000 closing price. Maverick shareholders will own
approximately 53% of the combined company and Prudential shareholders will own
approximately 47%. Maverick will apply to list its shares for trading on the New
York Stock Exchange, effective simultaneously with the closing of the
transaction.
The combined company will be called Maverick Tube Corporation and will be
headquartered in Chesterfield, Missouri. The company's Canadian operations will
continue to be headquartered in Calgary, Alberta and operate under the
Prudential Steel name. Gregg Eisenberg will continue to serve as Chairman, Chief
Executive Officer and President of Maverick. J. Donald Wilson, President and
Chief Executive Officer of Prudential will continue in his current role and also
become a director of Maverick after the combination. Barry R. Pearl, Vice
President, Finance and Chief Financial Officer of Maverick, will continue in the
same role at the combined company. The 11-member board of directors of the
combined company will include six members from the Maverick board of directors
and five members from the Prudential board of directors, including the current
Chairman of Prudential, Norman W. Robertson. As of June 1, 2000, the combined
company would have approximately 2,000 employees.
The transaction, which is structured as an arrangement under Alberta law, is
expected to be accounted for as a pooling of interest and to qualify as a tax
deferred reorganization. Completion of the transaction is subject to the
approval of the shareholders of both companies and by the Alberta courts, as
well as customary closing conditions, including regulatory and government
approvals in the U.S. and Canada. It is anticipated that the shareholder
meetings and the closing of the transaction would occur during the third
calendar quarter of 2000.
Gregg Eisenberg commented, "We are very excited about combining the U.S. and
Canadian operations of Maverick and Prudential to create a leading manufacturer
that will service and supply the entire North American customer base. We expect
the combined company to realize numerous benefits from expanded manufacturing
and marketing opportunities, as well as the sharing of `best practices' among
our respective disciplines. Excluding the impact of any transaction-related
charges, we expect that the transaction will be immediately accretive to both
earnings and cash flow, and believe both companies' shareholders will benefit
from the combination and future growth initiatives. We believe the transaction
will add substantial value for our combined shareholder base."
J. Donald Wilson added, "Maverick and Prudential are uniquely matched to create
long-term shareholder value. With only limited geographical overlap between the
two companies' operations, there is a compelling rationale for combining the
strengths of Prudential's Canadian presence with Maverick's U.S. market
position. The large, financially strong company created from this transaction
will be solidly positioned to pursue a broad array of growth initiatives. We
believe we have structured a combination that will benefit all of our core
constituencies - customers, employees and shareholders."
Maverick is being advised by Deutsche Banc Alex. Brown and Raymond James &
Associates, and Prudential is being advised by RBC Dominion Securities.
A joint conference call will be held on Monday morning, June 12th at 11 a.m.
Eastern time (10 a.m. Central time and 9 a.m. Mountain time). The dial-in number
for the call is (800) 946-0712 for parties in both the United States and Canada.
Participants should use the identification code 855957. A conference call replay
will be available starting at 1:00 p.m. Central time on Monday, June 12th
through midnight on Monday, June 26th, by dialing (888) 203-1112 and using
identification code 940297.
Informational and Forward-Looking Statements
This press release contains estimates and other forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934. The
estimates and statements reflect the two companies' current views with respect
to future events and financial performance. Although Maverick and Prudential
believe that the expectations described herein are reasonable, no assurance can
be given that these events will occur or that these estimates will be achieved.
Actual results of the combined company could differ materially from those
estimated as a result of certain factors. A discussion of these factors is
included in Maverick's periodic reports filed with the Securities and Exchange
Commission.
Contacts:
Maverick Tube Corporation Prudential Steel Ltd.
Barry Pearl, Vice President, Finance Fred Rea, Vice President and Chief
and Chief Financial Officer Financial Officer
(636) 733-1632 (403) 267-0333
www.maverick-tube.com www.prudentialsteel.com
