Schnitzer Steel Announces Completion of Its Joint Venture Separation Agreement with Hugo Neu Corporation
PORTLAND, Ore.--(BUSINESS WIRE)--Oct. 3, 2005--Schnitzer Steel
Industries, Inc. (NASDAQ:SCHN) today announced that it and Hugo Neu
Corporation ("Hugo Neu") completed the transaction contemplated by the
previously announced Master Agreement that provided for the separation
and termination of various joint venture relationships.
"We not only received very attractive scrap metal franchises, but
an excellent team of motivated people that have helped build these
quality businesses," said John D. Carter, President and Chief
Executive Officer. "We are making good progress toward integrating
these businesses into our existing operations. It's been our pleasure
to begin to become better acquainted with the managers and employees
who operate these businesses. We believe these businesses combined
with our existing wholly-owned operations will produce significant
benefits in making Schnitzer an even greater company in the years
ahead."
Mr. Carter added: "In particular, we would like to thank John Neu,
the rest of the Hugo Neu team and the joint venture personnel
remaining with Hugo Neu for their hard work in helping us build the
many joint venture businesses. Many of these people were instrumental
in the growth and success of the joint ventures, and we sincerely wish
them the very best in operating the excellent businesses Hugo Neu
received as part of the separation."
Under the joint venture Master Agreement, Schnitzer received:
-- The assets and related liabilities of Hugo Neu Schnitzer
Global Trade ("HNS Global Trade") related to the trading
business in Russia, Poland, Denmark, Finland, Norway and
Sweden, and a non-compete agreement from Hugo Neu that bars
them from buying scrap metal in certain areas in Russia and
the Baltic region for a five-year period ending on June 8,
2010.
-- The joint ventures' various interests in the New England
operations that primarily operate in Massachusetts, New
Hampshire, Rhode Island and Maine.
-- Full ownership in the Hawaii operations that was previously
owned 100% by Hugo Neu.
-- A payment of $52.3 million in cash, subject to post-closing
adjustments.
Hugo Neu, in exchange, assumed total ownership of:
-- The joint venture operations in New York, New Jersey and
California, including the scrap processing facilities, marine
terminals and related ancillary satellite sites, the interim
New York City Recycling Contract, and other miscellaneous
assets.
-- The portions of Hugo Neu Schnitzer Global Trade ("HNS Global
Trade"), a joint venture engaged primarily in scrap metal
trading, that is not related to the Russian and Baltic trading
business. This was split with HNS Global Trade redeeming its
50% membership interest from Schnitzer.
The initial announcement that described the detailed terms of the
deal was made on June 9, 2005 and can be obtained on Schnitzer's
website at www.schnitzersteel.com. In summary, the objective of the
separation was to provide each partner with an equitable portion of
the various joint operations.
Conference Call
Schnitzer will hold a conference call on October 6, 2005 to
discuss its fourth quarter 2005 earnings release and to briefly
discuss the joint venture separation. The conference call will be
broadcast over the Internet on October 6, 2005, at 11:30 a.m. EDT with
John Carter, President and Chief Executive Officer, Kenneth Novack,
Chairman of the Board, Greg Witherspoon, Interim Chief Financial
Officer and Kelly Lang, Vice President, Asset and Business
Integration. The call is being webcast by CCBN and can be accessed on
Schnitzer Steel's web site at www.schnitzersteel.com.
Schnitzer Steel Industries, Inc. is one of the nation's largest
recyclers of ferrous metals, a used auto parts retailer with more than
50 locations across the U.S. and in Canada, and a manufacturer of
finished steel products. The Company has a significant metals presence
on both the West Coast and Northeastern seaboard, as well as a trading
business that principally sells recycled metal products in foreign
markets. In addition, the Company's steel mill has an annual
production capacity of approximately 700,000 tons of finished steel
products. For more information about Schnitzer Steel Industries, Inc.,
visit www.schnitzersteel.com.
Certain statements in the press release are "forward-looking
statements' within the meaning of U.S. federal securities laws.
Schnitzer Steel Industries, Inc. intends that these statements be
covered by the safe harbors created under these laws. These
forward-looking statements include, but are not limited to, statements
about expected benefits of the transactions contemplated by the joint
venture separation. These forward-looking statements are subject to
risks, uncertainties, and other factors that could cause actual
results or events to differ materially from future results or events
expressed or implied by the forward-looking statements. Important
factors that could cause actual results to differ materially from the
information set fourth in these forward-looking statements include
factors and events, some of which are discussed in Schnitzer's Annual
Report on Form 10-K for fiscal 2004 filed in December 2004 and
Schnitzer's recent quarterly report on Form 10-Q filed in July 2005,
and include the Schnitzer's ability to successfully integrate the new
businesses received or acquired in the joint venture separation. Many
of these factors and events are beyond Schnitzer's ability to control
or predict. Given these uncertainties readers are cautioned not to
place undue reliance on the forward-looking statements, which only
speak as of the date of this press release. Schnitzer does not
undertake any obligation to release publicly any revisions to these
forward -looking statements to reflect events or circumstances after
the date of this press release or to reflect the occurrence of
unanticipated events, except as may be required under applicable
securities laws.
CONTACT: Schnitzer Steel Industries, Inc.
Tom Zelenka, 503-323-2821
www.schnitzersteel.com
SOURCE: Schnitzer Steel Industries, Inc.