Olin Sells Off Metals Division: Sale Price Less Than Estimated Worth
By Will Buss, Belleville News-Democrat, Ill.
Oct. 17–EAST ALTON — No job cuts are expected as a result of Olin Corp. selling its metals division to a New York firm. But according to the Securities and Exchange Commission, the $400 million deal is $140 million below the company’s book value.
The sale, which is expected to be completed by the end of the year, brings ownership of the leading North American producer of copper alloys and other metals to Global Brass and Copper Holdings Inc., an affiliate of New York-based private equity firm KPS Capital Partners LP. The sale includes Olin’s Brass Division, part of the Clayton, Mo.-based manufacturer’s operations in East Alton.
Olin Corp. spokesman Larry Kromidas said that the company’s balance sheet from Sept. 30 estimates the company’s book value –not tax value –at $540 million.
“We’re selling for $400 million,” Kromidas said. “That creates a book loss of $140 million.”
A spokesman from KPS declined comment Tuesday.
Olin Corp. spokeswoman Ann Pipkin confirmed that the new owners intend to keep current employees and to continue operations in East Alton, as well as in Cuba, Mo.; Waterbury, Conn.; and Montpelier and Bryan, Ohio.
“Our understanding is that those employees are being offered positions,” Pipkin said. “I cannot comment on the transaction or the decision on future operations, which is up to KPS. Until the transaction is completed, we’ll continue to operate the division as we have for a number of years.”
The deal affects some of the 2,600 members of the International Association of Machinists and Aerospace Workers District 9 in East Alton. Union business representative Dennis Pearson said the union was told Monday afternoon that KPS would honor the union’s current collective bargaining agreement, which remains in effect through Dec. 7, 2008.
“The new company is committed to assuming the new contract,” Pearson said. “That’s what we were told during the meeting.”
Olin’s metals business generated $2.1 million in revenue last year.
Pipkin said Olin employs about 3,500 in East Alton, of which more than half are metals manufacturing employees. The rest work in the Winchester Division, where ammunition is manufactured.
Contact reporter Will Buss at wbuss@bnd.com or 345-7822, ext. 24.
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