News Releases
Schnitzer Steel and Hugo Neu Corporation Announce Separation of Scrap Joint Ventures
PORTLAND, Ore., Jun 09, 2005 (BUSINESS WIRE) -- Schnitzer Steel Industries, Inc. (Nasdaq:SCHN) and Hugo
Neu Corporation today announced they have entered into a Master
Agreement that provides for the separation and termination of various
joint venture relationships. With the objective of providing an
equitable division of the various joint venture operations, Hugo Neu
will assume 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,
while Schnitzer will take over the joint ventures' various New England
operations in Massachusetts, New Hampshire, Rhode Island and Maine, as
well as acquire 100% ownership of the Hawaii operations of a Hugo Neu
subsidiary and receive a payment of cash.
Pursuant to the Master Agreement:
-- A subsidiary of Schnitzer will acquire the 50% interests in
various scrap metal joint ventures based in New England that
are owned by a Hugo Neu subsidiary with the result that these
joint ventures will become wholly-owned by a subsidiary of
Schnitzer;
-- Subsidiaries of Hugo Neu will acquire Schnitzer's 50%
interests in various joint ventures based in New Jersey, New
York and California with the result that these joint ventures
will become wholly-owned by subsidiaries of HNC;
-- Hugo Neu Schnitzer Global Trade LLC, a joint venture engaged
primarily in scrap metal trading, will be split, with HNS
Global Trade redeeming Schnitzer's 50% membership interest in
it in exchange for the assets and liabilities of HNS Global
Trade's trading business in Russia, Poland, Denmark, Finland,
Norway and Sweden;
-- A subsidiary of Schnitzer will acquire Hugo Neu's wholly-owned
scrap metal and green waste recycling business in Hawaii;
-- A subsidiary of Hugo Neu will pay a subsidiary of Schnitzer
approximately $52 million in cash at closing;
-- Schnitzer and Hugo Neu and certain of their affiliates will
enter into a number of related agreements governing, among
other things, employee transitional issues, benefit plans,
scrap sales and other transitional services; and
-- Schnitzer, Hugo Neu and certain of their affiliates will
execute and deliver mutual global releases.
In order to provide for an equitable division of joint venture
assets and liabilities, the companies evaluated and divided the
business primarily using historical earnings trends.
The Master Agreement has been approved by the Board of Directors
of each of Schnitzer Steel and Hugo Neu and the transactions
contemplated by the Master Agreement are subject to a number of
conditions, including obtaining certain third party consents, permit
amendments or transfers, Hugo Neu obtaining financing sufficient to
fund the cash payment to be made to Schnitzer and the repayment of
certain existing indebtedness, and other customary closing conditions.
With respect to the financing contingency, Hugo Neu has confirmed to
Schnitzer that it has entered into a definitive credit agreement
sufficient to provide the required financing, subject to customary
closing conditions. The parties currently expect that the closing of
the transaction will occur in the third calendar quarter of 2005.
Conference Call
Schnitzer's Chairman Kenneth M. Novack and CEO John D. Carter will
host a brief analyst/investor conference call and Internet webcast at
8:00 AM Pacific Time today, June 9. Supporting slides for the call
will be available on Schnitzer's web site at
http://www.schnitzersteel.com. Analysts and investors may dial in and
participate in the question/answer session. To access the call, please
dial 866-800-8652, participant passcode 83756267. International
callers may dial 617-614-2705, participant passcode 83756267. A
listen-only live broadcast of the call also will be available on the
investor relations page of the company's Website at
www.schnitzersteel.com. There, it will be archived and available for
12 weeks. The call will be available for replay for seven days. The
replay number is 617-801-6888, passcode 96533569.
About Hugo Neu Corporation
Hugo Neu Corporation, headquartered in New York City, is a
privately owned company founded in 1947 by the late Hugo Neu and led
by his son, John L. Neu. HNC is primarily engaged in the metal
recycling and industrial real estate businesses, both directly and
through its subsidiaries and joint ventures. With principal operations
located in the two largest metropolitan areas of the United
States -- New York City and Los Angeles -- HNC, after the split with
Schnitzer, will remain the largest exporter and one of the largest
recyclers of steel scrap in the nation. HNC currently recycles all of
New York City's post-consumer metal, plastic and glass.
For information about Hugo Neu Corporation, go to www.hugoneu.com.
About Schnitzer Steel Industries, Inc.
Schnitzer Steel Industries, Inc. is one of the nation's largest
recyclers of ferrous metals, a leading self-service used auto parts
retailer with 30 locations in the U.S. and Canada, and manufacturer of
finished steel products. The Company, prior to the split with its
joint venture partners, processes approximately 5.2 million tons of
recycled ferrous metals per year as well as brokers nearly 3.0 million
tons through various brokerage arrangements. In addition, the
Company's steel mill has an annual production capacity of
approximately 700,000 tons of finished steel products. The Company and
its joint venture partners operate primarily along the West Coast and
Northeastern seaboard of the United States. For more information about
Schnitzer Steel Industries, Inc. go to www.schnitzersteel.com.
Certain statements in this 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 the transactions contemplated by the Master Agreement, including
the anticipated timing of the closing. 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 forth in these
forward-looking statements include the timing of the satisfaction of
the conditions to closing under the Master Agreement and other factors
and events, some of which are discussed in the Annual Report of
Schnitzer Steel Industries, Inc. on Form 10-K for the most recently
ended fiscal year. 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 Steel Industries 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.
SOURCE: Schnitzer Steel Industries, Inc.
For Schnitzer Steel:
The Abernathy MacGregor Group
Jim Lucas, 213-630-6550
or
Gard & Gerber
Jessica Poundstone, 503-552-5009
David Dugan, 503-552-5008
or
For Hugo Neu Corporation:
The PR Consulting Group
Jim Haggerty, 212-683-8100, ext. 224
cell: 917-453-1510
or
Stephanie Olijnyk, 212-683-8100, ext. 226
cell: 646-285-8130