Universal Stainless and Alloy to Purchase the Assets of Patriot Special Metals

Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) announced today that it has signed an agreement to purchase the assets of Patriot Special Metals located in North Jackson, Ohio.

Patriot Special Metals is a substantially completed greenfield facility that includes a state-of-the-art radial forge in the initial startup phase and a Vacuum Induction Melting (VIM) facility which is scheduled to be completed by Universal Stainless for production in the first quarter of 2012. The facility also includes two Vacuum Arc Remelt (VAR) furnaces, scheduled for a fourth quarter, 2011 startup, and related equipment for heat treating and finishing long products including trepanning.

This acquisition will broaden the production capabilities of Universal, expand its product range in higher value, higher margin products and enable its entry into new market niches. Specifically, the addition of the largest hydraulic radial forge in the Western Hemisphere will expand the Company's products to include large and long forged squares, rounds, bars and custom shapes for Aerospace, Power Generation, Petrochemical and General Industrial Tool Steel and Shafting applications. Numerous specialty metals producers have also expressed strong interest in utilizing the unique characteristics of the radial forge to supplement their in-house hot working capacity. Adding VIM - VAR capability will enable Universal to enter selected global high nickel alloy and super alloy markets for aerospace parts, landing gear, helicopter rotor masts and gears and non-magnetic drill collars for oil and gas exploration.

The radial forge will also make a significant positive contribution to Universal's commitment to providing unparalleled customer service by further reducing cycle and lead times on existing business. The ability to process larger, longer pieces is expected to improve yields while producing excellent cross sectional integrity. Lastly, the additional business acquired due to the capabilities of the forge will increase the utilization of the recently-upgraded melt shop at the Bridgeville plant.

The purchase price for the assets is $104.5 million subject to certain adjustments and an additional $25 million for the completion of equipment installation. Universal will fund the initial transaction and subsequent capital requirements through a combination of internal cash, bank financing and a $20 million convertible note to the seller. PNC Capital Markets LLC will act as Lead Arranger and Administrative Agent on new credit facilities to finance the acquisition.

The transaction is expected to close by the end of July 2011, subject to customary closing conditions including regulatory approvals and the completion of bank financing. It is expected to be accretive to earnings in the first quarter of 2012 when the facility will be fully operational.

In a separate action, the Universal Board of Directors approved a $6 million capital expenditure for the addition of an Electro Slag Remelt Furnace to be installed in North Jackson, enhancing the Company's ability to respond to the recovery in power generation demand.

Chairman, President and CEO Dennis Oates commented: "This acquisition will significantly strengthen our industry position, enabling Universal to better respond to the needs of customers and to seize additional global opportunities in the Aerospace, Power Generation, Petrochemical and Heavy Industrial markets. We expect that with the addition of the North Jackson facility, the Company will substantially increase revenues and more than double net income by 2014. This is a transformative step that will fast-track the execution of our strategy to accelerate growth and increase shareholder value."

Citations

Please use one of the following formats to cite this article in your essay, paper or report:

  • APA

    Universal Stainless & Alloy Products Inc.. (2019, February 09). Universal Stainless and Alloy to Purchase the Assets of Patriot Special Metals. AZoM. Retrieved on November 19, 2019 from https://www.azom.com/news.aspx?newsID=29524.

  • MLA

    Universal Stainless & Alloy Products Inc.. "Universal Stainless and Alloy to Purchase the Assets of Patriot Special Metals". AZoM. 19 November 2019. <https://www.azom.com/news.aspx?newsID=29524>.

  • Chicago

    Universal Stainless & Alloy Products Inc.. "Universal Stainless and Alloy to Purchase the Assets of Patriot Special Metals". AZoM. https://www.azom.com/news.aspx?newsID=29524. (accessed November 19, 2019).

  • Harvard

    Universal Stainless & Alloy Products Inc.. 2019. Universal Stainless and Alloy to Purchase the Assets of Patriot Special Metals. AZoM, viewed 19 November 2019, https://www.azom.com/news.aspx?newsID=29524.

Tell Us What You Think

Do you have a review, update or anything you would like to add to this news story?

Leave your feedback
Submit