Feb 13 2006
Phelps Dodge has announced it has completed the sale of substantially all its North American magnet wire assets to Rea Magnet Wire Co., Inc.
Under the agreement, which was announced Nov. 16, 2005, Rea purchased Phelps Dodge Magnet Wire's manufacturing operations in Fort Wayne, Ind., and Monterrey, Mexico, as well as approximately 24 million pounds of copper inventory held at various North American warehouses. Phelps Dodge will continue to be a primary supplier of copper rod to Rea.
The transaction does not include the Phelps Dodge One Technology Center (OTC) in Fort Wayne; a magnet wire plant in Suzhou, China, that will become a unit of Phelps Dodge International Corp.; and certain intellectual property assets. Phelps Dodge plans to sell the 23-acre OTC property, which includes a multilevel office building and two warehouses.
Rea purchased the Phelps Dodge Magnet Wire assets, including the copper inventory, for approximately $139 million in cash. This figure includes a base purchase price of approximately $125 million and a working capital adjustment estimated at closing to be approximately $14 million.
Phelps Dodge estimates special, net after-tax charges of approximately $16 million associated with this transaction, resulting mostly from employee-related costs and asset impairment charges. Of this amount, approximately $11 million was recognized in the 2005 fourth quarter.
Rea offered positions to approximately 580 magnet wire employees in manufacturing operations at the Fort Wayne and Monterrey plants.
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