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Steel Technologies Signs Binding Letter of Intent to Purchase Kasle Steel Corporation

Posted on: Thursday, 13 April 2006, 09:00 CDT

Steel Technologies Inc. (NASDAQ/NM: STTX) today announced that it has signed a binding letter of intent to acquire all the outstanding stock of privately held Kasle Steel Corporation, Dearborn, Michigan. Through its five processing facilities, including three joint ventures, Kasle Steel is North America's largest independent supplier of automotive steel blanks, shipping over 1.5 million tons annually across a variety of platforms. The purchase price is approximately $49 million, subject to closing adjustments, which includes the assumption of approximately $19 million of liabilities. The Company expects to finance the transaction with its existing credit facility.

Kasle Steel's wholly owned operations include Kasle Steel Auto Blankers, Inc. in Flint, Michigan, and Kasle Steel of Canada, Ltd. in Windsor, Ontario. Its three joint venture operations consist of a 50% interest in RSDC of Michigan, L.L.C. in Holt, Michigan, a joint venture with Marubeni-Itochu Steel America, Inc.; a 50% interest in Kasle Metal Processing, LLC in Jeffersonville, Indiana, a joint venture with Automatic Feed Company; and a 49% interest in Delaco-Kasle LLC d/b/a Delaco Kasle Processing in Woodhaven, Michigan, a certified minority joint venture with Delaco Steel Corporation. These operations process material primarily on a toll basis under which steel is processed for a value-added fee without taking ownership.

Bradford T. Ray, Chairman and Chief Executive Officer of Steel Technologies said, "Kasle Steel and its joint ventures have a proud history and excellent reputation as world-class suppliers servicing the automotive industry. This acquisition will expand Steel Technologies' blanking capabilities considerably and will strengthen our position with key automotive customers. In addition, the combination substantially broadens our processing platform and enhances opportunities to grow with our existing customer base. Upon completion, we expect this acquisition to be immediately accretive to earnings."

Subject to the completion of final due diligence, Steel Technologies expects to complete negotiation of a definitive stock purchase agreement and close the acquisition on or about May 4, 2006.

Steel Technologies processes flat-rolled steel to specific thickness, width, temper, finish and shape requirements for automotive, appliance, lawn and garden, office furniture, agriculture, construction, hardware, and consumer goods. The Company has 19 facilities, including its joint venture operations, located throughout the United States and Mexico. More information about the Company may be found on the World Wide Web at www.steeltechnologies.com.

Statements contained in this release, which are not historical facts, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties (contained in the Company's SEC filings), which could cause actual results to differ materially from those projected. These include, without limitation, statements regarding the anticipated completion date of our acquisition of Kasle Steel Corporation. The acquisition of Kasle Steel Corporation is subject to customary closing conditions, including further due diligence and the execution of a definitive stock purchase agreement; we cannot guarantee that the acquisition will be completed on schedule, if at all. SEC filings may be obtained from the SEC or by contacting the Company.

Source: Business Wire

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