Gerdau Ameristeel Corp. has completed its acquisition of Chaparral Steel Co. Chaparral's shareholders approved the merger at a special shareholder meeting on Wednesday, September 12, 2007.
Gerdau Ameristeel’s acquisition of Chaparral—the second largest producer of structural steel products in North America—broadens the company’s product portfolio, giving it a full range of structural steel products.
Chaparral operates two minimills, one located in Midlothian, Texas, and the other located in Dinwiddie County, Va. Chaparral employs approximately 1400 employees and has an annual installed capacity of 2.8 million tons. The combined companies now become the second-largest structural steel producer in North America.
"Today is a defining moment in the history of our company. This solidifies our position as one of the major steel producers in our region with a major market position in structural steel products in addition to rebar and merchant bar products," said Mario Longhi, President and CEO, Gerdau Ameristeel. "We are excited to offer our customers the broadest range of long steel products in the mini-mill sector."
"The completion of this acquisition confirms our global strategy of being one of the consolidators in the steel industry," said Andre Gerdau Johannpeter, CEO of the Gerdau Group. "We are confident that the growth of our North American operations will add value and bring benefits for our customers, shareholders, employees and the communities in which we operate."
Gerdau Ameristeel's acquisition of Chaparral Steel is being financed, in part, by a US$1,150,000 Bridge Loan Facility and a US$2,750,000 Term Loan Facility which have been provided by two separate international syndicates of banks, each arranged by ABN AMRO Bank NV, HSBC and J.P. Morgan Securities, Inc. Subsidiaries of Gerdau Ameristeel are the borrowers under the facilities.
The Bridge Loan Facility matures 90 days from closing (with an option to extend for a further 90 days) and the Term Loan Facility has tranches maturing 5 and 6 years from the closing. Gerdau SA and certain of its
Brazilian affiliates have guaranteed the obligations of the borrowers under both credit facilities. The Bridge Loan Facility and the Term Loan Facility are not secured by the assets of Gerdau Ameristeel or its subsidiaries.
Gerdau Ameristeel is the second-largest mini-mill steel producer in North America with annual manufacturing capacity of approximately 12 million tons of mill-finished steel products. Through its vertically integrated network of 19 minimills (including one 50%-owned joint-venture minimill), 19 scrap recycling facilities, and 53 downstream operations, Gerdau Ameristeel serves customers throughout North America. The company's products are generally sold to steel service centers, steel fabricators, or directly to original equipment manufacturers for use in a variety of industries, including construction, cellular and electrical transmission, automotive, mining and equipment manufacturing.