Ferro Corporation (the “Company”) announced today that it has completed the sale of its precious metals-based powders and flakes product lines in North America and Asia to Ames Advanced Materials Corporation (“Ames”), a wholly-owned subsidiary of Ames Goldsmith Corporation, a major producer of precious metal products.
The transaction includes the manufacturing assets of the Company’s South Plainfield, New Jersey facility, including associated inventory, and also includes the assets of its precious metals powders and flakes business line in Tsukuba, Japan. Through September 2013, these precious metals powders and flakes operations had value-added sales of approximately $23 million.
In addition to the asset sale, Ferro and Ames also entered into a seven-year supply agreement. Through the supply agreement, Ferro secures a reliable source of key raw materials for its downstream businesses while protecting its cost position.
The net cash proceeds from the sale were approximately $13 million. In addition, Ames provided Ferro with precious metals valued at approximately $43 million to satisfy its outstanding precious metal lease obligations. Primarily as a result of the sale, Ferro’s current precious metal net lease obligations have been reduced to approximately $42 million compared with obligations of approximately $90 million at September 30, 2013. The Company estimates that the transaction, including the supply agreement, will result in a financial reporting gain in excess of the net cash proceeds and a tax loss estimated at approximately $5 million.
Commenting on the transaction, Peter Thomas, President and Chief Executive Officer of Ferro, said, “The sale of these assets is a result of our continuing business and asset portfolio evaluation process and the harvesting of underperforming and non-core businesses. This transaction allows us to redeploy assets into attractive growth opportunities. While the transaction will reduce projected value-added sales for the fourth quarter of 2013, we are not modifying our prior adjusted earnings guidance.”
The Ferro South Plainfield site and its approximately 160 employees join Ames as part of the transaction. The Ferro Tsukuba site and its employees remain with Ferro.
Mr. Thomas added, “On behalf of everyone at Ferro, I thank our team at South Plainfield for their many contributions. I am confident they will have exciting opportunities ahead.”
The transaction does not include the Company’s precious metals business in Hanau, Germany, which produces gold, palladium and platinum precious metal products. Hanau also will continue to produce silver products for current customers in Europe and for Ferro’s other businesses, primarily the Automotive Glass business.
The Company was advised by J.P. Morgan and Jones Day.
Source: http://www.ferro.com/